California Cannabis: Past Criminal Conviction Not a Deal Breaker Under Proposed Rules Amendments

On October 16, 2020, the Bureau of Cannabis Control (“BCC”) issued a Notice of Proposed Rulemaking relating to regulatory changes to the commercial cannabis license application process. The proposed rule changes will affect Title 16, California Code of Regulations, sections 5002, 5017, 5021 and 5600.

These proposed regulations will implement the statutory changes called for in AB 2138, which was signed by the Governor on September 30, 2018. The provisions within AB 2138 became operative on July 1, 2020, and were intended to remove some of the licensing and employment barriers faced by those with prior criminal convictions or disciplinary actions where those individuals can demonstrate rehabilitation. According to the BCC’s press release:

[T]he changes to the statutes prohibit bureaus from requiring applicants for licensure to disclose information or documentation regarding the applicant’s criminal history. Additionally, if a bureau decides to deny an applicant for licensure, the bureau must provide the applicant with notice of the denial, including the reason for the denial, as well as instructions for appealing the decision and the process for receiving a copy of the applicant’s conviction history.

AB 2138 also amends BPC section 480 to prohibit a bureau from denying a license to applicants based on a criminal conviction or the acts underlying a conviction if the applicant makes a showing of rehabilitation. The amendments to BPC section 482 require bureaus to consider, when determining whether to deny, suspend, or revoke a license, whether an applicant or licensee has made a showing of rehabilitation, if the person has either completed the criminal sentence without a parole or probation violation, or if the person is rehabilitated based on the bureau’s rehabilitation criteria.”

In addition to the foregoing, the language of BPC §480 has been amended to allow a bureau to deny a license for reasons related to a criminal conviction or formal discipline if:

  1. The conviction was in the past seven years and is substantially related to the qualifications, functions, or duties of the business or profession; or
  2. The conviction is substantially related to the qualifications, functions, or duties of the business or profession and was for a serious felony, as defined in Penal Code section 1192.7, and certain specified sex offenses, even if the conviction occurred more than seven years ago; or
  3. The applicant is presently incarcerated or was released from incarceration within the last seven years for a crime that is substantially related to the qualifications, functions, or duties of the business or profession; or
  4. The applicant was released from incarceration more than seven years ago for a crime that is substantially related to the qualifications, functions, or duties of the business or profession and the conviction was for a serious felony, as defined in Penal Code section 1192.7, and certain specified sex offenses; or
  5. The applicant has been subject to formal discipline by a licensing board or bureau in or outside of California within the preceding seven years based on substantially related professional misconduct.

The new rules will provide more specific criteria for determining whether a crime is “substantially related to the qualifications, functions, or duties of the profession.”

The written comment period for these proposed regulations will be open until 5 p.m. on December 1, 2020. Written comments on the proposed regulations may be submitted to the BCC by mail or email as follows:

Kaila Fayne

Bureau of Cannabis Control

2920 Kilgore Road

Rancho Cordova, CA 95670

E-mail: BCC.comments@dca.ca.gov

The onerousness of the cannabis licensing process here in California has been a common complaint since the inception of legalization, and has certainly had a chilling effect on the number of former black- and grey-market operators that have moved into the legal, regulated space. Hopefully, providing these regulatory changes will truly serve to reduce licensing and employment opportunities for those who have been rehabilitated following criminal conviction, and will be at least a small step in the right directing of allowing greater participation in the regulated cannabis marketplace.