California Lawsuits Mount Over Revocation Of Provisional Licenses

Lawsuits from various businesses alleging they were not afforded adequate due process after the Department of Cannabis Control pulled their provisional, or temporary, permits are on the rise in California. At least four California marijuana companies are suing the state, alleging they were treated unfairly and not allowed to appeal to an independent mediator after the revocations of their provisional licenses.

“Every single person should write in and say that the DCC has exceeded its scope of authority by promulgating regulations that do not afford due process rights to our operators,” said Los Angeles attorney Dana Cisneros, who represents one of the four companies suing the state over a revoked license.

With 75% of all cannabis licenses classified as provisional (i.e. temporary), industry officials and attorneys complain that regulators are too slow to issue full annual marijuana business permits. 

Provisional licenses are a stopgap measure that requires a lower threshold for businesses to meet in order to obtain those permits. As such, they also come with fewer protections built into state law. Notably, those who hold provisional licenses are afforded due process rights much differently than those who hold annual licenses. That being said, the latter group is required to meet stringent requirements, such as complying with state environmental laws.

Currently, state law “permits provisional license revocation, suspension, and denial of renewal at the discretion of (regulators) at any time,” Deputy California Attorney General Patrick Boyne wrote in a June 11 brief that accompanied one of the due process lawsuits.

Cisneros noted the matter of due process should be front and center for the industry, especially at this time, because the DCC is amid reworking regulations that govern marijuana companies.

DCC spokeswoman Christina Dempsey insists that the agency is “committed to fair and equitable processes for all licensees.”

“DCC has filed proposed regulations to establish a process for notifying provisional licensees when their provisional license is at risk of suspension or revocation of their application is being considered for denial,” Dempsey wrote, adding the proposed rules “provide the provisional licensee with the opportunity to provide additional information for consideration or to contest the proposed action.”

In the June 11 filing, Deputy Attorney General Boyne wrote, “Federal law recognizes no right to engage in commercial cannabis activities, therefore there is no cognizable property interest sufficient to support a federal due process claim.”