The DCC’s Cannabis Local Jurisdiction Retail Access Grant Program

On September 8, 2022, the newly appointed members of the California Department of Cannabis Control’s Cannabis Advisory Committee (“CAC”) met for the first time. During the meeting, which lasted over four hours, the CAC discussed the Local Jurisdiction Retail Access Grant Program (the “Grant Program” or “The Cannabis Local Jurisdiction Retail Access Grant Program”) that Assembly Bill 178 (“AB 178”) charged the Department of Cannabis Control (the “DCC”) with establishing. Although AB 178 set certain limited requirements for the Grant Program, it left the task of establishing the majority of the eligibility and qualification details to the DCC. 

The Cannabis Local Jurisdiction Retail Access Grant Program Overview

The Grant Program was established in response to the fact that although the State began issuing commercial cannabis businesses licenses in 2018, the majority of localities (cities and counties) in the State of California still prohibit the operation of retail cannabis businesses, more commonly known as “dispensaries”, within their borders. With 330 local jurisdictions within the State still outlawing dispensaries, many Californians cannot access legal cannabis and therefore turn to the illegal cannabis market to obtain their medical and recreational cannabis products. 

To assist localities in establishing cannabis retail permitting and licensing programs, the State via the 2022 – 2023 Budget Act allocated twenty (20) million dollars for the Grant Program. According to the DCC, 

The Cannabis Local Jurisdiction Retail Access Grant Program aims to provide consumers with better access to regulated, tested cannabis product by supporting the expansion of California’s legal cannabis marketplace, thereby reducing the need for consumers to turn to the illicit market. By reducing local barriers to access, this [G]rant[P]program also seeks to reduce the size of the illicit market and stabilize the legal cannabis supply chain, in which higher wholesale prices depends, in part, on establishing sufficient retail stores statewide to meet existing consumer demand. 

Statutory Requirements for the Grant Program

AB 178 sets out certain statutory requirements that the DCC must utilize in establishing the Cannabis Local Jurisdiction Retail Access Grant Program. A summary of the statutory requirements is detailed below. However, for a complete list of such requirements see sections 51 and 52 of AB 178. 

Eligibility Criteria for the Cannabis Local Jurisdiction Retail Access Grant Program

First, to be eligible to receive Grant Program funds:

1. A local jurisdiction seeking Grant Program funding must not already have a local cannabis retailer permitting/licensing program in place; and
2. The local jurisdiction seeking Grant Program funding must have a plan to develop and implement a cannabis retailer permitting/licensing program and submit that plan to the DCC with its application for Grant Program funding.

Phases of the Funding Process

Second, AB 178 requires Grant Funds to be dispensed in two (2) phases and sets out the basic requirements for how each Phase must be managed. Specifically, during Phase I of the funding process,

1. The DCC may only award up to $10,000,000 of the total Grant Program funds,
2. All funds awarded during Phase I must be issued to assist local jurisdictions to develop and implement local jurisdiction retailer permitting/licensing programs,
3. The total amount awarded must be proportional to the population served, and
4. Priority will be given to local jurisdictions that include provisions to assist equity applicants and where consumption of cannabis is statistically highest. 

During Phase II of the funding process, which shall begin on or after June 30, 2023, 

1. Up to $10,000,000 with a maximum of $2,000,000 per local jurisdiction, may be awarded, and
2. Additional funds will be awarded to local jurisdictions that issued retail licenses to equity businesses after receiving Phase I funding.

What the Funds Can and Can’t be Used For

Third, AB 178 identifies the ways that Grant Program funding may and may not be spent by local jurisdictions. Specifically, local jurisdictions may use Grant Program funds to:

1. Pay for staff salaries and benefits,
2. Support social equity applicants and licensees,
3. Pay for environmental reviews, and
4. Cover permitting expenses.

Conversely, Grant Program funds may not be used to:

1. Cover the costs and fees related to litigation; or
2. Pay the fines or other penalties incurred for violations related to unlicensed commercial cannabis activities. 

Cannabis is Advisory Committee Involvement

Despite these basic Grant Program requirements, AB 178 left the majority of the Cannabis Local Jurisdiction Retail Access Grant Program’s creation, management, and implementation responsibilities to the DCC. In turn, the DCC asked the CAC to weigh in on what the DCC should take into consideration when determining which localities to award Grant Program funds to. 

Rogoway Law’s Public Comment

Ahead of the CAC’s September 8, 2022, meeting, Rogoway Law Group submitted written public comment addressing the five conversation topics the CAC was slated to discuss with regard to the Grant Program. Although the CAC was expected to discuss and issue guidance to the DCC regarding the Grant Program, after taking oral public comment and discussing the Grant Program for a short amount of time, it opted to continue the conversation to a later date to allow CAC members more time to generate unanimous guidance.

How Local Jurisdictions Can Prepare for the Release of the Grant Program Applications

Although the DCC is yet to release Grant Program applications or application requirements, local jurisdictions interested in obtaining funds through the Grant Program can start preparing for the release of such items. Per AB 178, local jurisdictions will be required to submit a written plan that details how it will develop and implement a cannabis retailer permitting/licensing program if it receives Grant Program funds. Though the requirements for the plan are yet to be established, it is extremely likely that the DCC will want to see answers to the following questions in the required written plan:

1. Will the locality’s retailer permitting/licensing program include provisions to assist social equity applicants?
2. If Grant Program funds are awarded, how will the locality spend the money it receives to create, implement, and support its retailer permitting/licensing program?
3. What ordinances, regulations, or rules does the locality currently have in place that are applicable to commercial cannabis retailers?
4. Will the locality issue both non-storefront and storefront retail permits/licenses?
5. How many non-storefront retail permits/licenses and storefront retail permits/licenses does the locality plan to issue?
6. Will the locality allow on-site consumption at licensed storefront retail business locations?
7. What type(s) of local permit/license/other authorization will a commercial cannabis retailer be required to obtain to operate within the locality?
8. If Grant Program funds are awarded, how long will it be before the locality will begin issuing cannabis retailer permits/licenses and what will the application process for such permits/licenses consist of?

Local jurisdictions that have not done so already should start brainstorming responses to the questions above. Although the questions appear simple, they will likely not be answerable without first obtaining stakeholder input and obtaining that input may take weeks or even months depending on how a locality chooses to engage with stakeholders on the issue of creating and implementing a cannabis retail permitting/licensing program.  

Given that (1) Grant Program funds will only be available to those localities that have, to date, chosen not to adopt regulations allowing commercial cannabis retail businesses within their borders, and (2) many such localities chose not to adopt regulations allowing commercial cannabis retail businesses at the urging of their constituents, garnering stakeholder support and understanding constituent concerns about the creation of a retailer permitting/licensing program will be absolutely vital.

If you are an elected representative, municipal employee, or an engaged citizen of a local jurisdiction which has chosen not to adopt regulations allowing commercial cannabis retail businesses within its borders to date, please contact us for assistance with the Cannabis Local Jurisdiction Retail Access Grant Program. At Rogoway Law, our cannabis industry attorneys are available to assist stakeholders from local jurisdictions in preparing for the release of Grant Program applications and drafting Cannabis Local Jurisdiction Retail Access Grant Program applications.