Undue Concentration

Posted by Raza Lawrence on June 25, 2019

     

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     On June 18, 2019, the Los Angeles City Council unanimously passed a motion that will allow applicants located in areas of “undue concentration” to apply for storefront retail dispensary licenses in the upcoming application round of 100 licenses beginning September 3.  The City Council directed the Los Angeles City Attorney to prepare an amended ordinance reflecting these changes by June 27, 2019.  Previously, the law did not allow the City to issue any retail licenses in these areas of undue concentration until at least 2020.  The change in law opens up large portions of the City to new cannabis retail applications in 2019, including some of the most popular areas for tourists and visitors, providing numerous opportunities to cannabis investors and entrepreneurs.

Los Angeles city law includes soft caps on the number of cannabis retail storefront licenses that may be issued for each community plan area in the City, varying based on the population of each community.  In some areas of Los Angeles, including parts of downtown, Venice, and the San Fernando Valley, the number of licenses allotted has already been exceeded by the Phase 1, Pre-ICO dispensaries that have been grandfathered in.  (https://cannabis.lacity.org/licensing/licensing-map). 

Under the city law, these are considered to be areas of “undue concentration.”  Now that the City Council has changed the law on June 18, applicants in one of these areas of undue concentration will be apply to apply for new retail licenses along with applicants in other parts of the City.

There is one catch.  In order to be issued a storefront license in an area of undue concentration, an applicant will need to obtain a finding from the City Council that placing a new storefront at the proposed location “would serve public convenience or necessity.”  (Under the law, the City Council will be deemed to have made the necessary findings to support public convenience or necessity if a request is made and not acted on after 90 days.).

In practice, obtaining this finding of public convenience or necessity from the City Council will require applicants to first gain the approval of the City Council-member in their district, who would then place the request to the City Council.  If the Council-member from the applicant’s district supports the request, the rest of the City Council would generally support the request too, as council members rely on each other to support each others’ votes for projects in their own districts.

The bottom line is if you have property in an area of undue concentration and want to apply for a storefront dispensary licensed, you will need to obtain the support of your local council-member as soon as possible.  At this time, the City has issued no objective criteria to determine which projects should and should not be accepted, relying instead on a vague and ambiguous standard of “public convenience or necessity.”  For now, individual City Council-members are free to interpret this standard however they choose, and appear to have wide discretion to approve or reject proposed cannabis dispensaries in their districts.

 

Contact us today to discuss your options even hire our office to lobby the council if you are seeking an area with undue concentration. We are a full service cannabis law firm. Licensing, compliance, lobbying, defense and more.

 

 

 

 

 

 

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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.