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Breaking News: LA County Releases Proposed Cannabis Regulations

Posted by Margolin & Lawrence on December 19, 2017

L.A. County released long-awaited draft cannabis regulations yesterday. The Board of Supervisors, which creates laws that govern all of the unincorporated areas of the county (any area that is not part of an incorporated city) has been listening to the findings of the Cannabis Advisory Group over many months and has released the zoning requirements that will apply to commercial cannabis in the county, as well as the activities that will be licensed.The County will be issuing for Adult-Use (recreational) and Medical cannabis uses. Our LA cannabis attorneys have reviewed the proposed cannabis regulations and our findings are below. 

How Many Bitcoins to Apply for an L.A. Cannabis License?

Posted by Margolin & Lawrence on December 15, 2017

At a meeting this week, the LA City Council adopted a draft ordinance on the subject of the fees and fines for cannabis licensing, bringing the city one step closer to opening its official cannabis licensing process. Our Los Angeles Cannabis Lawyers are often asked how much the compliance process will cost. Now that LA has published their fee schedule, many existing cannabis businesses have sticker shock.  Existing cannabis retailers, for instance, will have to pay nearly $10,000 for an official LA retail license. Cannabis microbusiness owners will need to pay fees for each cannabis activity they are conducting. The City will likely only accepting payment in cash or by check (no bitcoin, yet).

A Macro-Overview of Cannabis Microbusiness Laws In California

Posted by Margolin & Lawrence on December 13, 2017

Our Los Angeles Cannabis Attorneys are constantly fielding questions about a popular license category called microbusiness. The Type 12 license allows you to engage in multiple cannabis activities on the same premises. For example, you could cultivate up to 10,000 sq. ft. of canopy, and distribute, and deliver under one license for microbusiness. The chance to diversify your business and conduct multiple activities under one license is appealing to many existing and prospective cannabis business owners.

The Bureau of Cannabis Control (BCC), released their final regulations for cannabis microbusiness licensees last week, after revising them post SB-94 (you can read more about the process here). Here’s what they have to say about the restrictions on cannabis microbusinesses:

  • Microbusinesses must engage in at least 3 different commercial cannabis activities
  • Microbusiness applicants have to describe operating procedures as required for each activity
  • If a microbusiness license is revoked or suspended, it affects every activity done using that license
  • Microbusiness license fees range from $5,000 to $120,000 depending on size of operation (up to $5 million)
  • Retail operations & Microbusinesses with retail sales can give out free samples to medicinal marijuana customers, as long as it meets the same conditions as normal retail sales
  • Sales at events are allowed
  • Retailers & Microbusinesses with retail will have to employ security guards

If you’re interested in learning more about cannabis microbusiness or retail, Contact us to speak to a Los Angeles Cannabis attorney. 

 

L.A. City Council Passes New Cannabis Ordinances

Posted by Margolin & Lawrence on December 7, 2017

Yesterday the LA City Council passed three ordinances that will regulate recreational cannabis sales, manufacturing, cultivation, distribution, delivery, and microbusiness in the city of LA. The council also voted on the Social Equity Program and cannabis zoning, including the setbacks from sensitive-use areas that will be required of licensed cannabis businesses. Volatile cannabis manufacturers, for example, will have to be not only 600 feet away from schools, but also at least 200 feet away from any residential parcel.

The city is also imposing caps on the number of licenses granted per neighborhood, so licensing will be a competitive process in some areas; if you haven’t already, now is the time to start preparing your cannabis business for licensure. The city has rigorous requirements for proof of operation in compliance with Prop D if your business is a pre-ICO, as well as strict safety and environmental regulations for marijuana cultivators and manufacturers.

The new regulations passed by the city can be found here:

If you are a cannabis operator with an existing marijuana business in the city of LA, email us at info@margolinlawrence.com to speak with one of our cannabis attorneys. We can advise you on the next steps for your operation as Los Angeles enters a new era for cannabis.

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L.A. City Council Voting on Cannabis Ordinances TODAY

Posted by Margolin & Lawrence on December 5, 2017

Cannabis attorney Allison Margolin addressing the LA City Council on the new zoning regulations on Monday:

Today  the LA City Council will vote to determine all of the City's.  the city's new restrictions on where a cannabis business may be located. The current California cannabis law requires that cannabis businesses be located more than 600 feet from all schools.

Los Angeles cannabis attorney

On top of that, LA's most recent draft of its location ordinance required businesses intending to conduct on-site retail sales to be located 750 feet away from sensitive-use areas, including schools, public parks, libraries, and drug treatment facilities, as well as any existing marijuana retail business.

While this is a more lenient approach to sensitive-use areas than LA's previous zoning restrictions, which called for an 800-foot buffer zone, some cannabis businesses and marijuana advocates, including our Los Angeles Cannabis lawyers, argue that introducing two different distancing standards will only complicate the already-opaque standards for marijuana zoning.

The City Council's vote will take place at 10 A.M. tomorrow, December 5th, at 200 N. Spring St.

California Redefines Volatile Manufacturing

Posted by Margolin & Lawrence on December 1, 2017

Our Los Angeles cannabis attorneys are often faced with questions about which substances count as "volatile solvents" when it comes to cannabis manufacturing. The state has added clarity in the new regulations released on November 17th, which define the solvents for volatile and nonvolatile manufacturing of cannabis extract. You can read the full set of regulations here: regulations on Manufactured Cannabis Safety.

The distinction between “volatile” and “nonvolatile” is relevant to the process of cannabis manufacturing because there are different license types for each type, and some jurisdictions allow one but not the other. Additionally, the zoning and sensitive-use requirements can be different for the two types of cannabis manufacturing.

Cannabis-infused products like marijuana edibles, tinctures, and oils comprise a large part of the legal cannabis industry’s sales, and are only increasing in popularity. A key ingredient of these products is cannabis extract – the pure, often high-THC-content cannabis distillate that can be combined with other products to create goods ranging from weed brownies to CBD bath soaps. To create this distillate, it’s necessary to use chemical solvents to extract the active ingredients from whole marijuana flowers. However, these solvents are often flammable, pressurized chemicals like butane, which, if used improperly during the extraction process, can be dangerous.

To limit potential dangers, California split the activity of cannabis manufacturing into two different categories, distinguished by whether or not they used “volatile solvents,” and placed differing restrictions on the two categories, with additional precautions required for manufacturing operations that used volatile solvents.  In June 2017’s Medicinal and Adult-Use Cannabis Regulation and Safety Act, a “volatile solvent” was defined as a solvent that “is or produces a flammable gas or vapor that, when present in the air in sufficient quantities, will create explosive or ignitable mixtures.”

Cannabis manufacturers who use non-volatile solvents or no solvents at all (e.g. operations that only packaged or labeled goods, or that created cannabis-infused products using distillate purchased from a third party) are treated as “Level 1 Manufacturers,” while manufacturers who dealt with volatile solvents are “Level 2 Manufacturers.” To qualify for a Level 2 Manufacturer operating license, businesses would have to meet a much more strict set of criteria than the Level 1 Manufacturers would.

Since two of the most popular solvents used in the cannabis extraction process – butane and ethanol – counted as volatile solvents by this standard, and relatively few municipalities in California allow for Level 2 cannabis extraction, many were concerned that these regulations would make it too difficult for new small-scale extraction operations to get their businesses up and running. Additionally, some cannabis manufacturers argued that ethanol, a substance that’s food-safe, safe to handle, and is only ignitable as vapor in extremely high concentrations, shouldn’t be treated as “volatile” for the sake of cannabis manufacturing. By responding to these concerns and downgrading ethanol from “volatile” to “nonvolatile,” the Department of Public Health has taken an important step toward making cannabis extraction more accessible to California marijuana businesses.

Locally, the City of Los Angeles will be issuing cannabis licenses for both volatile and non-volatile cannabis manufacturing. Stay tuned for updates for updates, and contact us at info@margolinlawrence.com to speak with one of our LA Cannabis attorneys about the latest on Measure M.

Update on the L.A. Cannabis Social Equity Program

Posted by Margolin & Lawrence on November 29, 2017

Yesterday, the Los Angeles City Council met to discuss cannabis issues before voting on the final ordinance next month. Our Los Angeles Cannabis attorneys were present and are closely following developments on the path to a final LA Cannabis Ordinance and Social Equity Program. Broadly, the Los Angeles Social Equity Program aims to prioritize applicants who were disproportionately impacted by the war on drugs and criminalization of cannabis, and give them an opportunity to participate in the now legal, newly regulated market. 

The discussion yesterday centered around the social equity program and the tier system, which establishes priority to individuals with a criminal history. The social equity program will benefit disadvantaged communities. As a reminder, Tier 1 applicants are those who have a prior cannabis related conviction, a cumulative household income below the federal poverty line and have at least five years residence in an area impacted by the War on Drugs. So the question becomes, should priority be given to individuals with a criminal history? 

Opinions were heard on both sides of the controversial issue. The purpose of the social equity program is to help remove barriers for persons with a criminal history to equitable ownership and employment opportunities. Concerns were raised the criteria for Tier 1 was limited to cannabis only related crimes. The LA Dept. of Cannabis Regulation reasoned the purpose is to provide legitimate business opportunities in a now legalized industry. Oppositions were raised that the tier system did not distinguish between the level of offense such as, a misdemeanor or felony and excludes low income neighborhoods not impacted by the War on Drugs. This suggests person(s) convicted of a minor cannabis crime will have priority over person(s) who have been established in a disproportionately impacted community for many years. Recommendations were made to the Dept. of Cannabis Regulation to define distinct requirements to qualify as a Tier 1 applicant. For more information on the social equity program click here.

In addition to the Social Equity Program, the Council is also considering the revised Location Ordinance which introduces new distancing requirements. An important change to the proposed zoning ordinance is the addition of a 600 foot buffer to sensitive use areas for all activities including cultivation and manufacturing. Make sure you check the location

of your business is compliant with the land use ordinance. The vote is next week so make your voice heard and submit your comments to the City Council by December 4th

If you have questions about the Social Equity Program or the new zoning changes,Contact us to speak with one of our Los Angeles Cannabis Attorneys.

Los Angeles Introduces Cannabis Social Equity Program Criteria

Posted by Margolin & Lawrence on November 20, 2017

As we approach the Thanksgiving holiday, Los Angeles is one step closer to cannabis licensing. Here is the latest from our Los Angeles cannabis attorneys who attended today's City Council meeting. Today the Council further discussed the Social Equity Program and the 4 Tiers of priority that will be given to eligible applicants. Tier 1 will get the highest priority for Los Angeles cannabis licensing (after Measure M Retail priority which you can read more about here), and Tier 4 will get the lowest of the Social Equity applicants.

Breaking news: California releases emergency cannabis regulations

Posted by Margolin & Lawrence on November 16, 2017

Today, California’s three state cannabis licensing authorities released proposed emergency licensing regulations for commercial medicinal and adult-use cannabis. The regulations are intended to reflect the law that was set out in California’s Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), and will replace the draft regulations that were released for cannabis cultivation, manufacturing, retail and other activities in April 2017 (you can read more about the prior regulations in our post here).  These regulations will allow the state to start issuing temporary licenses to conduct commercial cannabis activities on January 1. Our San Francisco and Los Angeles cannabis attorneys are analyzing the new regulations and comparing them to the previous draft and we will do a more in depth post on what has changed very soon. 

Ask an LA Cannabis Attorney: A Guide to the City's New Licensing Regulations

Posted by Margolin & Lawrence on November 14, 2017
With Los Angeles on the verge of rolling out new licensing for marijuana businesses, many businesses, both preexisting and new, are wondering what the City's procedure will be. The plethora of meetings and details surrounding the subject might seem daunting, especially since the City has not specified or solidified many aspects of the program. With the January deadline closing in, the City is expected to resolve these discrepancies as clearly as possible before 2018. 
 
So what do we know about cannabis licensing? Right now, what we have to go on is the Draft Requirements for Commercial Cannabis Activity published on  September 22nd, as well as the Cannabis Social Equity Report published on October 18th. Additionally, a motion on the subject was released on October 31st. Although these are all drafts and have not yet been approved, this blog post will attempt to clarify what we know so far. 
 
The City has rolled out three different processing phases, which treat existing and new marijuana business  applicants differently: 
 
Phase 1: Proposition M Priority Licensing (Existing Retail Only) 
 
Applicants for Proposition M Priority Processing can only apply for Retailer Commercial Cannabis Activity (including delivery.) This may include on-site cultivation, as allowed by Prop D. Once applications become available, any business that wants to apply for Prop M Priority Processing must apply within 60 days of when the application period is opened. 
 
Each Prop M Priority Processing candidate  will receive a provisional license once the department has approved its eligibility. If it is not eligible, it must cease all business and reapply under the general processing phase. If it is eligible, then the business will receive a provisional license, granting it limited immunity to operate until its full license is approved or denied by the Commission. In order to receive a permanent license, a Prop M Priority candidate must be approved and provide financial statements proving the business is clear of any tax obligations. 
 
Phase 2: Social Equity Program Processing (Existing NON-Retail Businesses) 
 
The motion passed on October 31st provides a path for priority licensing for "All applicants that were conducting non-retail Businesses in the City of Los Angeles prior to January 1, 2016" and meet various other requirements, including qualifying for the Social Equity Program. 
 
Businesses have 15 business days to apply for priority after the applications become available. Businesses must prove that they provided product to Prop D compliant dispensaries and were in business before January 1, 2016. Moreover, all taxes should be paid. 
 
What is the social equity program? As an existing business, there is only one way to enter the Social Equity program, and that is as a "Tier 4 Applicant." The Social Equity Analysis from October 18th details the following ways in which a Tier 4 Applicant would potential take part in the program: 
 
Tier 4 applicants would potentially include market-rate applicants that provide space, capital or other means of support to a Program participant and those who do not have sufficient floor space or eligible zoning to provide on-site support to a Program partner under the incubator partner program. In lieu of a direct incubator program partnership with a Program, potential Tier 4 applicants could provide business mentoring, training workshops, other non-financial contributions to Program applicants or make direct financial contributions to the Community Reinvestment or Industry Ownership Funds.
 
In other words, Tier 4 applicants under the Social Equity program must either provide space, capital, or time in order to benefit from priority processing. This phase is perhaps the City's attempt to incentivize existing businesses to partake in the Social Equity program. 
 
Phase 2: Social Equity Program Processing (New Businesses - After January 2016) 
 
New businesses can also apply for the Social Equity program. Indeed, the program is geared towards recruiting low-income and otherwise underprivileged entrepreneurs. Tier 1, 2, and 3 applicants are low-income Los Angeles City residents. They will have access to loans, training, and help in managing their business. This is ideal for a low-income individual with a solid plan for a cannabis business. 
 
For an existing business with an operation that isn't older than January 2016, it is also possible to apply for the Social Equity program. However, this does not necessarily include a provisional license. The report does not make clear whether or not existing retail businesses after January 2016 would be eligible for the program. Moreover, membership in the program is at the "discretion of the Executive Director of the Department of Cannabis Regulation and the Cannabis Re gulation Commission. "
 
Phase 3: General Processing (New Businesses - After January 2016) 
 
Finally, there is the General Processing phase. This is the phase in which all business who do not qualify for the other phases will apply. The City has not released information on this processing. Furthermore, there are no provisional licenses or limited immunity available for these types of applicants. That means that if you are a business operating now and do not qualify under Prop M or Social Equity, you must shut down operation until all licenses have been either approved or denied. 
 
It is an exciting time for California and for the City of Los Angeles. As the January deadline inches closer and closer, it is important to keep track of all new drafts and measures adopted by the City in regards to the application process.  For more information on LA cannabis laws, check our FAQ or contact our cannabis attorneys at info@margolinlawrence.com.

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This blog is not intended as legal advice and should not be taken as such. The possession, use, and/or sale of marijuana is illegal under federal law.