Current Status of San Francisco City Cannabis Licensing

Posted by Margolin & Lawrence on March 29, 2018

The City of San Francisco began its process of licensing retailers to sell adult-use cannabis on January 6, 2018. Any MCD (Medical Cannabis Dispensary) businesses that conducted delivery, cultivation, manufacturing, testing, or any other cannabis activity were required to register the activity with the Office of Cannabis between September 26, 2017 and November 30, 2017. Those that registered were then required to get their temporary permit(s) from the City. To continue each of these activities in 2018, temporary licensing must be obtained from the State. Any applicant who did not register as an existing business before November 30, 2017, must apply for a permit as a new cannabis business. The Transition Provisionof City Ordinance 230-17 declares that existing MCD applicants temporarily permitted to sell cannabis starting January 1, 2018 cannot cultivate cannabis without new licensing as of April 1, 2018.

Beginning in 2018, all applicants must apply to the Equity Program (see eligibility requirements) either as individuals or incubators before applying for cannabis licensing. Since San Francisco was consistently targeted by the War on Drugs, the City is determined to make amends through this initiative, and compliance is mandatory for all cannabis businesses.

All new businesses require a license from the San Francisco Office of Cannabis and the State of California in order to sell cannabis in San Francisco. To be eligible for a temporary permit in the City of San Francisco, applicants must comply with the Citys zoning codes. These can be found on the SF City Planning website - check out the zoning for cannabis retail businesses. The Land Use Regulations for the City are have also been outlined in a table by the San Francisco Office of Cannabis, which provides useful zoning requirements for all retail and non-retail cannabis businesses (including cultivation, manufacturing and distribution). Mobile cannabis dispensaries will not be permitted in San Francisco.

At this time all cannabis licensing is temporary, subject to review by each municipal zones governing body and the State before permanent licensing can be applied for through the Office of Cannabis. According to Section 1605 of Article 16 in San Francisco Citys Ordinance 230-17 Amending the Administrative, Business and Tax Regulations, Health, and Police Codes,all cannabis businesses awarded a temporary license must apply for permanent licensing within 30 days of the date when the Office of Cannabis makes such permits available. Once permanent licensing becomes available, temporary licensing will no longer be offered to new businesses.

In summary, whether you are looking to start a business in cultivation, manufacturing, retail, distribution, a combination of the above (microbusiness), or testing, you will need to obtain temporary licensing from the City of San Franciscos Office of Cannabis. The window for existing MCDs to register with the City has passed, but these businesses can still apply for new licensing along with all other new cannabis business applicants. The Office of Cannabis in San Francisco has not yet announced when permanent licensing will become available to businesses awarded temporary licenses by both the City and the State. More information about the application process and requirements can be found on the San Francisco Office of Cannabis website.

How Do I Find a Compliant Cannabis Property in Los Angeles?

Posted by Margolin & Lawrence on January 25, 2018

As cannabis entrepreneurs and investors learn about the legal requirements to operate a compliant cannabis business, the next question many arrive at is - so how do I find a compliant property?

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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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.

Ask an LA Cannabis Attorney: So What's Happening in WeHo?

Posted by Margolin & Lawrence on November 9, 2017

On November 5th, the City Council of West Hollywood put an end to a long period of speculation about the future legal status of cannabis in their jurisdiction, moving to allow recreational and medical marijuana dispensaries, delivery services. In particular, the WeHo City Council approved of allocating 8 licenses per type of cannabis activity (Adult-Use retail, Consumption Areas with On-Site Adult-Use retail, Delivery Services, and Medical-Use dispensary,) and confirmed this decision on the morning of November 8th. These activity types are of interest in themselves: Allowing retail spaces to provide an area for on-site consumption means WeHo might soon be the home of hip, Amsterdam-style marijuana cafés.

While this explains quite a bit about West Hollywood's approach, some aspects of the city's regulations remain unclear. For instance, the exact selection process for the 8 licenses per activity has not been decided by the City Council. Moreover, the zoning regulations for marijuana businesses have also not been finalized by the city. To address these questions, the City Council of West Hollywood will meet again on November 20th to discuss zones and grading criteria for licenses. The City Council has given itself a deadline of December 6th to resolve these issues, which it hopes to meet before the new laws come into effect on January 1st.

As it stands, what our cannabis lawyers know about the future process for license application selection is as follows: The top eight applications will be issued licenses based on merit. Some of the criteria in consideration for "merit" will include compliance with the city's social equity program, operating a pre-existing cannabis business that's in good standing in WeHo, or previous experience with a cannabis business elsewhere in the state. Again, these criteria have been merely discussed and not approved. Once the criteria are fixed, the city will essentially grade each application based on the standards they establish.

Since relatively few licenses will be granted, it is imperative for any marijuana business applicant in West Hollywood to not only meet the criteria set out by City Council, but also to provide adequate reasoning for why its merits qualify it to be chosen over the other applicants. The application period will be open in January 2018 for a period of 30 days; since the timeframe is so short, if you're interested in starting a cannabis business in WeHo, it's important to get started on the application process now.

For more information or to set up a consultation with our Los Angeles cannabis lawyers, take a look at our guide to California's new marijuana laws or email us at info@margolinlawrence.com

Palm Springs Opens Cannabis Business Applications

Posted by Margolin & Lawrence on August 10, 2017

As of this Monday, the resort community of Palm Springs, California has begun accepting permit applications for a full range of adult-use cannabis businesses. Like several other cities in the Inland Empire and Coachella Valley, Palm Springs already allows for marijuana cultivation and medical marijuana dispensaries. However, the city’s new regulations go a step further toward opening the region up to the full range of the California cannabis industry. In particular, the sections of City Ordinance 1933 which deal with adult-use cannabis suggest that Palm Springs plans on alleviating its restrictions on the type and number of marijuana businesses permitted to operate. This has the potential to significantly expand the region’s marijuana industry.

Until the passage of this ordinance, Palm Springs had firm restrictions on the distribution sector of the cannabis industry: the previous regulations only allowed medical cannabis collectives to operate dispensaries, and, of these collectives, only allowed a maximum of six operations to hold permits at any one time. Though it isn’t clear how many businesses will be granted permits to distribute adult-use cannabis in the future, the new ordinance notably doesn’t include an analogous restriction on the maximum allowable number of adult-use distribution permits, which may indicate that the city won’t extend these limits in its future approach to cannabis licensing.

The other major change introduced in the ordinance is the expansion of licensing to the other sectors of the marijuana industry, as described in our blog post on California's types of cannabis licenses. While marijuana permits were previously limited to distribution and cultivation, the new regulations allow for licenses in manufacturing, testing, and transportation to be granted for both medicinal and adult-use cannabis. This change would allow for the entire cannabis industry to be represented in Palm Springs – not only growing marijuana plants and the sale of the finished product, but also all the steps in between.

Of course, as is often the case in California marijuana law, none of the changes described in the ordinance will take place in the imminent future. The city will have to pass a ballot measure this November establishing the taxation regulations for cannabis businesses before any of these licenses are actually given out, and no adult-use cannabis licenses will go into effect before 2018. Still, these new regulations suggest that Palm Springs is taking an active role in embracing the ongoing process of marijuana legalization.

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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.