What's the 411 on 420 and "Undue Concentration?"

Posted by Margolin & Lawrence on July 3, 2019

Recently, rumors and misinformation have circulated surrounding LA’s “undue concentration” rules for commercial cannabis licensing. The undue concentration rules have not been eliminated, as some have falsely claimed. LA has recently changed details about the policy, in a way that will allow more retail dispensary licenses to be issued sooner. Some have feared, however, that the latest changes may introduce an element of unfairness to the licensing process.

Take Our Quiz to Find Out if You May Qualify for Social Equity

Posted by Zachary Tucker on June 13, 2019
 

Retail Cannabis Licensing Draft Ordinance Heads to L.A. City Council

Posted by Margolin & Lawrence on June 4, 2019

On Tuesday, May 28, the Los Angeles City Attorney Michael Feuer filed a draft ordinance regarding retail cannabis licensing.

City Council Action Unanimously Passed Today

Posted by Margolin & Lawrence on April 11, 2019

The LA City Council held a meeting today to follow up on the April 1 meeting of the Budget Committee and approve the recommendations made on April 1.  After a good deal of discussion about the enforcement efforts against unlicensed dispensaries, the City Council approved all the recommendations with only minor revisions.  This means the licensing process can now move forward. 

The funding approved today by the City Council will allow the Social Equity Program to move forward, which is an integral part of the upcoming Phase 3 licensing process awarding cannabis licenses to new businesses in the City of LA.  So far, the licensing has been delayed while the City has worked through issues surrounding the Social Equity Program.  We are still waiting for the City to announce details of the timing of the next phase of LA cannabis licensing.  This phase will start with the issuance of 200 retail storefront and 40 retail delivery licenses, issued largely to Social Equity applicants.  

Now that the City Council has approved the Social Equity funding, we expect the licensing to open up soon, and now is the time for anyone interested in applying to find a property and get all the elements of their applications in order.
Before the ruling on the Social Equity funding, there was an update on enforcement efforts against unlicensed cannabis businesses, including utilities disconnects, cease and desist letters, and search warrants.

So far, the City has been shutting down the illegal businesses bureau by bureau.  The City started the crackdown in the Valley, where it has gone to 22 locations, with 10 more scheduled for next week when it will be finished with the Valley.  Then, it will move to the South bureau, where it will start with 10 locations in the Harbor area, and then move to the Southeast.  The City has also been disconnecting utilities from unlicensed businesses in the past month.  $2.3 million has been set aside by the police department for cannabis enforcement. 

Hemp and CBD updates

Posted by Margolin & Lawrence on March 20, 2019

Know Your Rights: Understanding State Hemp Regulations

 

March Report: Where We Are with Los Angeles Phase 3 Licensing

Posted by Margolin & Lawrence on March 8, 2019

February 28th, 2019

“I’m frustrated.”

These two words were expressed throughout last week’s city council meeting on the current state of cannabis affairs in the city of Los Angeles. Business owners, hopeful entrepreneurs, private citizens and council members reverberated this sentiment from the city’s long delayed licensing process and yet to be fulfilled promise of a social equity program.

The Department of Cannabis Regulation (DCR) held its regular meeting before city council on February 28th to report on the progress the department has made to date and forecast expectations for the future of cannabis licensure in Los Angeles and the long awaited opening of phase 3. Executive Director Cat Packer sat before the council and highlighted the department’s substantial progress since its commencement in 2017, but made clear that “we still have a long way to go.”

A call was made for a more inclusive social equity program to expand the demographic of eligible applicants to other disenfranchised communities impacted by the war on drugs particularly, hispanics. However, strains on resources and available funding have left little for the social equity program to get off the ground.

To date, 55 temporary approvals have been granted to phase 2 applicants and 178 to phase 1 applicants. There are hundreds left to wade through pushing back the opening of phase 3 to sometime in spring or summer. The DCR proposed a bifurcated application process for phase 3 general processing when the time comes that would split the application process in two parts. Part One would establish a lottery or first-come first-serve process and Part Two would be a merit based system. The two part process is suggested to mitigate fairness and allow those who do not have access to resources a fair chance to participate for a license.

Cat also pointed out the large disparity between the number of retail licenses that will be available for phase 3 eligible program applicants. To comply with the city’s regulations for undue concentration, in the city that is home to some 4 million residents, granting one license per 10,000 residents allows for approximately 200 retail licenses available to some 10,000 plus people who are eligible for the social equity program.

An immediate need was called for increased enforcement to shut down illegal and unlicensed cannabis businesses from operating in the city. The black market is not only harming licensed businesses by taking customers from paying high dispensary prices but the city. In order for the city to provide funding generated from tax revenues requires a crack down on the black market.   

With all eyes on Cat Packer for answers, she in turn responded to city council asking for direction and guidance on how the department is to proceed. A motion was submitted in support of immediate funding to implement the program and expand the demographic of eligible applicants to participate in the Los Angeles cannabis market and increased enforcement to crack down on the black market.   


March 5th, 2019

The Cannabis Regulations Commission met on March 5th and presented their recommendations to the City Attorney that would establish policies for processing of phase 3 applications. Phase 3 would begin with a 60 day pre-vetting process of Social Equity applicants to verify Tier 1 or Tier 2 qualification. Verified Tier 1 or Tier 2 applicants will then be eligible to move forward into the first phase of the licensing process. The DCR will issue 100 licenses in this initial phase allocating 75 to qualified Tier 1 applicants. Qualified Tier 1 applicants would receive priority receiving 75% of the available licenses during this initial phase so long as all basic application requirements are met, including:

  • A signed lease with proof of payment or deposit, or a property deed

  • Meet all sensitive use requirements, including undue concentration

  • Payment of required license fees

  • Ownership organizational structure

  • Financial information

  • Proposed staffing plan

  • Indemnification

  • Complete and detailed diagram

  • Proposed security plan

  • Radius map

  • Labor peace agreement

  • Current Certificate of Occupancy

  • Compliance with the Equity Share Rules


The second phase will allocate an additional 100 licenses establishing no priority between Tier 1 or Tier 2 applicants. The second phase will establish a “first-come, first-serve” process that will allow the first 100 qualified applicants will move forward. Basic qualifications required to be met are payment of the required license fees or deferment approval; ownership organizational structure; financial information; indemnification; and, labor peace agreement. The remaining qualifications mentioned above would be required within 90 days.

The Commission also recommended the implementation of a pilot program for Type 9 Retail Non-Storefront delivery services. A total of 40 licenses would be available allocating 20 licenses to pre-vetted Tier 1 Social Equity applicants. The pilot program will also allow verified applicants who could not obtain a Type 10 retail license due to undue concentration limits will receive priority for a Type 9 delivery license. This will allow licensees to remain in their building and operate as a non-storefront retailer in lieu of having to locate and secure another compliant location. Eligible phase 2 applicants will also have an opportunity to amend their application to include delivery so long as they are compliant with the city’s zoning and regulatory requirements.


Phase 3 Licensing Estimated Timeline


Phase 3 Application Processing

60 day Pre-Vetting Period

  • Basic Tier 1 or Tier 2 qualification

  • Indemnification

Phase 1:

14 day application window

  • Qualified Tier 1 or Tier 2 applicants will be processed for 100 retail licenses (75% reserved for Tier 1 applicants). Pre-vetted applicants will receive 15 days notice of when the first phase application window is to open.

  • Deficient applications will have 5 days from the start of their application to rectify insufficiencies or issues with the basic qualifications.

Phase 2:

30 day application window

  • Pre-vetted Tier 1 or Tier 2 applicants who meet basic qualifications (see above) on a “first-come, first-serve” basis.

  • Applicants will have an additional 90 days to submit the remaining application requirements

  • Deficient applications will have 5 days from the start of their application to rectify insufficiencies or issues with the basic qualifications.

Delivery Pilot Program:

  • Pre-vetted Tier 1 or Tier 2 applicants will receive 15 days notice for when Type 9 delivery licenses will become available

  • Pre-vetted Tier 1 or Tier 2 applicants subjected to undue concentration limits will have priority

  • Eligible phase 2 applicants will have opportunity to amend their application to include delivery

Deficient applications will have 5 days from the start of their application to rectify insufficiencies or issues with the basic qualifications.

The 2018 Farm Bill: What it Means for Hemp and CBD

Posted by Margolin & Lawrence on December 11, 2018

The House Committee on Agriculture is in the process of finalizing the 2018 Farm Bill, which is expected to go into effect later this month. It’s likely that the bill’s provisions will include the legalization of hemp, in the form of the removal of the plant from the government’s list of Schedule I Controlled Substances. Not only will this mean that hemp can be grown much more widely, it will also affect the production of hemp derivatives, including hemp-derived CBD. However, the legality of CBD products remains more complicated than this news may suggest.

As discussed in a prior blog post, the legal status of CBD can be very confusing to consumers, businesses, and lawmakers alike. As a substance that is derived from the cannabis plant, but is not cannabis’ main active ingredient, CBD currently occupies an unclear middle ground – particularly in California, where the state has imposed additional rules affecting how the various types of CBD may be legally used.

The legalization of hemp, though a step forward in the overall process of cannabis legalization, doesn’t do much to resolve the confusion surrounding CBD products. Even after hemp is legalized, CBD will be considered a drug and therefore subject to regulation by the FDA. Though the FDA has approved certain cannabis-derived CBD medications, CBD’s status as a drug makes it illegal to use as an ingredient in any kind of food or food additive.

Topicals, oils, and other non-edible forms of hemp-derived CBD, on the other hand, may not necessarily be banned once hemp is legalized. However, the FDA has yet to make a statement regarding this possibility – though they have sent unambiguous legal warnings to CBD businesses that make unsubstantiated or false claims about their products, indicating that they plan to regulate all CBD products to some degree, they’re less clear about the future legal status of hemp-derived CBD and non-edible hemp derivatives in general. 

In California, the law on CBD edibles will remain paradoxical even after hemp is legalized. While CBD products with THC levels of 0.3% or more will be treated as cannabis edibles and therefore legal, CBD products with lower THC levels – or no THC at all – will be considered food products and therefore banned, regardless of whether they’re derived from cannabis or hemp. However, hemp-based non-edible CBD products are not currently regulated by any state agency, meaning their legal status remains unclear. For the sake of the state’s cannabis consumers and businesses, hopefully California will respond to the new Farm Bill by clarifying the legal status of these products.

For more information on the legal status of hemp and CBD, check our Guide to California Cannabis Laws or contact our cannabis attorneys at info@margolinlawrence.com

Cannabis and the 2018 Midterm Elections

Posted by Erin Williams on November 5, 2018
The 2018 Midterm Elections are perhaps the most important in recent memory. They are the first, best, and last hope the Democrats have to set a blue wave through Congress and provide some much-needed resistance to the actions of the Trump administration. However, the excitement has overshadowed the conversation on cannabis. 
 
On   November 6th, Michigan and North Dakota will vote on statewide measures to legalize recreational cannabis. Meanwhile, Utah and Missouri will consider legalizing medical marijuana.  
 
Although California is one of the most pot-friendly states in the nation, the future of the legal cannabis industry does depend on a few races. 
 
In the governor's race, Lt. Gov. Gavin Newsom is predicted to beat Governor Jerry Brown. Gov. Brown has said unflattering things about cannabis users in the past. However, in recent months he has approved a bill giving   privacy  to recreational marijuana users and signed another bill that   expunged many marijuana-related crimes. Still, Lt. Gov. Newsom, a former San Francisco mayor, is the frontrunner and a longstanding supporter of cannabis reform.
 
For the U.S. Senate, eyes are on Sen. Diane Feinstein (D) to be re-elected. Feinstein has evolved her position over the years from supporting the war on drugs to supporting states' rights to set cannabis policy. It is also worth mentioning that as a member of the Senate Judiciary Committee, Sen. Feinstein recently co-sponsored a bill that would deschedule cannabis. 
 
Another incumbent, U.S. House Representative Dana Rohrabacher (R-Huntington Beach) faces Democratic challenger Harley Rouda.  Rep. Rohrabacher was one of the creators of the Rohrabacher-Farr Amendment, which protected legal medical marijuana users from federal prosecution. But Rohrabacher's vocal support of Russia and Putin could lead to his defeat   on Tuesday. A recent   New York Times  poll  shows Rohrabacher and Rouda tied. Rouda has not come forward with any cannabis policy and is assumed to be neutral.
 
For more information on cannabis this midterm season, Leafly has an excellent   piece. Find your polling place   here
 
And from everyone at Margolin & Lawrence, GO VOTE!

Where are Cannabis Lounges Allowed?

Posted by Margolin & Lawrence on November 1, 2018

As recreational cannabis becomes legal in California, the marijuana industry is expanding into a number of different spaces that previously were impossible to operate in legally. One of the most exciting of these new opportunities is the cannabis lounge. Made famous by Amsterdam’s marijuana cafés, lounges are cannabis retail businesses that also allow for the on-site consumption of cannabis – an exciting possibility for customers, business owners, and investors alike. However, while a great deal of interest in these businesses exists across the state, only a few jurisdictions in California plan to allow cannabis lounges, and only some of those locations currently are open to licensed cannabis lounge operations.

When it comes to cannabis lounges currently in operation, the Bay Area is ahead of the pack by a wide margin, with a number of cannabis lounges fully licensed and open for business – seven in San Francisco and one in Oakland, according to a recent Leafly article. No other jurisdiction, in California or elsewhere, has more individual lounges in operation. However, several other cities in California are in the process of opening up for fully licensed cannabis lounge business.

After the Bay Area, the Los Angeles area is furthest ahead in the process of cannabis lounge licensing. Earlier this year, West Hollywood opened applications for cannabis lounges, planning to grant a total of 16 licenses – 8 for edible-only lounges, and 8 for lounges allowing edibles, smoking, and vaping. These applications are still under review, but the city plans to announce its decisions by the end of November, meaning operational businesses may be only a few months away. The city of Los Angeles has also shown interest in social consumption lounges. Between LA City and West Hollywood, this indicates that LA county may not be far behind the Bay Area when it comes to cannabis lounges.

While San Francisco and Los Angeles are the largest California cities to move toward legalizing cannabis lounges, several other areas in the state are beginning to explore the possibility as well. Earlier this month, the city of Eureka voted to allow on-site consumption. After voting to approve cannabis lounges last year, the city of Palm Springs issued its first permit for on-site cannabis consumption this summer, and, though the business in question has yet to open, several other communities in Coachella Valley are considering following suit.

While cannabis lounges remain a controversial issue in many communities, with local residents concerned about the potential nuisances that may come with legal on-site consumption, many cities across California are also beginning to see their potential economic and social appeal. Given the large amount of consumer interest demonstrated in the cities that have already moved toward licensing on-site consumption, the number of jurisdictions embracing legal cannabis lounges can be expected to increase in the future.

New Cannabis Legislation in Riverside County

Posted by Margolin & Lawrence on October 30, 2018

Last Tuesday, the Board of Supervisors in Riverside County approved an ordinance allowing the following commercial activities starting on 26th December: Testing, Manufacturing, Distribution and Wholesale Nurseries. There is now a 60-day deliberative period regarding the cannabis businesses in Riverside based on the newly approved ordinance. The Board also voted to allow a limited number of dispensaries and cultivators to operate in 2019. Up to nineteen dispensaries and fifty grows will be permitted in unincorporated Riverside County as decided by a 3-2 vote following a public hearing that last nearly four hours. The Board also approved an “Implementation Plan for Retail and Cultivation” uses that is scheduled for process in early January 2019. The proposal process will include pre-registration by interested applicants, and the issuance of a Request for Proposals by the Planning Department. However, there are certain conditions that will be enforced regarding additional taxation and fees associated with each of these activities as determined by the Planning Commission.

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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.