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Manzuri Law: CA Cannabis Business’ Guide to CEQA Compliance

Cannabis companies in California need evidence of California Environmental Quality Act (CEQA) compliance to operate legally. This law ensures that every project that attempts to work within the state adheres to proper environmental standards and that its operations would have no potential adverse effects on the environment.

CEQA compliance requires your cannabis business prove that it poses no environmental threats. Since the legalization of recreational cannabis and the implementation of the licensing process, CEQA compliance has proven to be one of, if not, THE most difficult components of obtaining and maintaining cannabis licensure. The CEQA requirements are robust, and local bureaucracy is often complicated and very slow. As such, proper legal counsel is needed to help gather the necessary evidence of CEQA compliance to get your cannabis business up and running. A primer is provided below.

What Is CEQA?

CEQA is a California environmental protection law ensuring that all projects proposed in the state have minimal environmental impacts.

Under CEQA, state and local government agencies are required to inform both decision makers and public agencies about a proposed project’s potential environmental impacts. This requires those same governmental bodies to conduct feasible measures to reduce the possible environmental impacts.

There are two exceptions to CEQA compliance, which can be granted by public agencies:

  • Negative Declaration (“ND”): The State will accept a brief document from project leaders whose proposed projects will not cause adverse effects on the environment. A ND or Mitigated ND includes environmental findings related to the proposed project, supporting both its feasibility and lack of significant environmental effects. The local government is essential in recognizing and legitimizing a project’s ND.
  • Environmental Impact Report (“EIR”): This is granted for those proposed projects that may cause adverse impacts on the environment. In this report, the public agency tasked with this environmental determination will detail all of the potential impacts that the proposed project may incur. This document will also present possible measures to reduce and/or avoid such impacts. Finally, experts will analyze and present project alternatives.

The purpose of these detailed CEQA reports are to allow the public to both review the evidence of environmental impacts and provide input on proposed projects.

An integral participant in administering CEQA guidelines is the Governor’s Office of Planning and Research (OPR). The OPR is in charge of:

  • Developing the CEQA Guidelines with the Natural Resources Agency’s cooperation,
  • Coordinating with state-level reviews of CEQA documents through the State Clearinghouse,
  • Designating lead agencies to implement the CEQA, and
  • Assisting state and local government agencies in developing technical advisories regarding selected CEQA topics.

How CEQA Relates to Cannabis Compliance

CEQA compliance applies to all businesses operating in the state of California, and cannabis businesses are no exception. Cannabis businesses must either comply with CEQA or meet a legal exemption.

CEQA compliance requires documentation that show that once your cannabis business is operational, its operations will not harm the environment. Both city and state governments must review these documents and decide whether or not you should be issued a permit to operate. In addition, they must be ready with alternative measures should they determine that issuing your cannabis business a permit will lead to environmental hazards.

Once you receive the CEQA clearance your business requires, the city and state can issue an annual license. Those without CEQA compliance can only receive a provisional license.

Exemptions

Misinformation on the internet abounds regarding CEQA compliance in certain California cities, many of which falsely states local compliance isn’t necessary. However, CEQA is governed by both the city and the State. Therefore, any proposed cannabis project must pass the Department of Cannabis Control’s review.

The DCC provides a Project-Specific Information Form that is used to determine whether your project has the potential to generate adverse environmental impacts and may require CEQA document preparation.

CEQA’s Requirements

CEQA includes both procedural and substantive requirements:

Procedural CEQA Requirements

You must prepare documents detailing your project’s potential environmental impact that the public can access for review and possible objections. Generally, there are two separate steps that public agencies and government bodies take to decide which environmental document your project needs to prepare:

  • Step 1 – CEQA Assessment: The DCC will examine your business to determine whether it is subject to CEQA.
  • The DCC may prepare a Notice of Exemption (NOE) for your business if it determines that your cannabis project does not need to proceed further in the review process.
  • Step 2 – Initial Study: The DCC will conduct an initial study on your project if the agency determines that it is not exempt. This study will assess whether your cannabis project may have significant effects on the environment. Results from this study will determine whether your cannabis company will require a ND or an EIR.

Substantive CEQA Requirements

CEQA requirements state that the responsible government agency may deny a project that fails compliance with CEQA. Rather, public agencies have the option to approve alternative projects or environmental mitigation measures.

Compliance with CEQA requirements is absolutely necessary. Regulators will shut any cannabis operation down for failure to comply or properly report to CEQA regulations.

Typical resources/environmental factors that public agencies are concerned with include, but are not limited to:

  • Aesthetics
  • Agricultural Resources
  • Air Quality
  • Biological Resources
  • Cultural Resources
  • Geology and Soils
  • Greenhouse Gas Emissions
  • Hazardous Materials
  • Hydrology and Water Quality
  • Noise Pollution
  • Transportation and Traffic
  • Utilities and Service Systems

A more comprehensive list of environmental resources can be found in the Environmental Checklist Form.

Challenges With CEQA

CEQA compliance issues largely depend on local jurisdictions’ initiatives and, possibly, unique approach to CEQA compliance. It is in your company’s best interest to be well informed of local CEQA analyses and where that would put your cannabis business.

Conclusion

Consider contacting business law experts to help you navigate your local business laws and determine your best options to proceed. Experts in the local cannabis industry can help you qualify for a CEQA exemption and the resources to determine your eligibility.

Disclaimer: This article has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice.

CA Cannabis Business’ Guide to CEQA Compliance

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