(a) Beginning no later than March 1, 2024, the department shall allow a cultivation licensee to do both of the following:

1. (1) Change the type of size of a cultivation license as set forth in subdivision (b).
2. (2) Place a cultivation license in inactive status as set forth in subdivision (c).

(b) The department shall allow a licensee to change the type of size of a cultivation license, as follows:

1. (1) At the time of license renewal, a licensee may change an existing cultivation license to a cultivation license type with a smaller maximum canopy size.

2. (2) At the time of each subsequent license renewal, a licensee may do any of the following:

   1. (A) Restore the licensee’s original cultivation license type.
   2. (B) Maintain the cultivation license type selected by the licensee pursuant to paragraph (1).
   3. (C) Change to a different cultivation license type with a maximum canopy size smaller than the licensee’s original cultivation license type, which may be larger or smaller than the cultivation license type selected by the licensee pursuant to paragraph (1).

3. (3) If a licensee holds a provisional license, the licensee may do either of the following, at the election of the licensee:

   1. (A) Continue to pursue the requirements for annual licensure in connection with the licensee’s original cultivation license type.
   2. (B) Pursue the requirements for annual licensure in connection with a smaller cultivation license type selected pursuant to this subdivision.
4. (4) Nothing in this subdivision requires the department to allow changes to nursery licenses or to the classification of a cultivation license as indoor, outdoor, or mixed-light.

(c) The department shall allow a licensee to place a cultivation license in inactive status at the time of license renewal, as follows:

1. (1) A licensee who holds a license in inactive status shall not engage in the cultivation of cannabis, except that the department may allow a licensee with a license in inactive status to do both of the following:

   1. (A) Engage in the drying, curing, grading, trimming, packaging, and sale of cannabis harvested before the date the license was placed in inactive status.
   2. (B) Possess and maintain seeds and immature plants used solely for propagation to preserve the genetic lineage of the licensee’s cannabis plants.
2. (2) A license in inactive status shall remain in inactive status until the license is next renewed. At that next renewal, and at each renewal thereafter, the license may be placed in either active or inactive status, at the election of the licensee.
3. (3) A licensee who holds a license in inactive status shall pay a reduced license fee in an amount determined by the department in accordance with Section 26180.

4. (4) A license in inactive status shall remain a license issued pursuant to this division. All of the following apply to a licensee who holds a license in inactive status:

   1. (A) The licensee shall continue to comply with all laws and regulations applicable to cultivation licensees.
   2. (B) If the licensee holds a provisional license, the licensee shall continue to pursue requirements for annual licensure.
   3. (C) The licensee shall be allowed to maintain eligibility for state programs available to cultivation licensees, including, but not limited to, grant programs.