March 5, 2020: Los Angeles, CA
On March 5, 2020, the City of Los Angeles Cannabis Regulation Commission held a special meeting at City Hall to provide an update on the City’s commercial cannabis licensing, and an opportunity for public comment and discussion of cannabis licensing issues among members of the Commission. The Cannabis Regulation Commission makes recommendations to the City Council about proposed changes to the City’s cannabis laws and regulations.
The meeting began with public comments from many people. The main theme of the comments was that social equity applicants, who applied for dispensary licenses on September 3, have spent large amounts of money securing properties and preparing licensing applications, and are frustrated with the City’s slow pace in issuing any licenses. Commenters urged the City to issue as many licenses as possible to social equity applicants who are ready to start operating their businesses, and to reform any regulations that are restricting the number of licenses the City may issue and causing the slow pace at which they are being issued. Numerous members of the Cannabis Regulation Commission acknowledged that social equity applicants are facing a financial crisis, and that action must be taken very soon to help the applicants who have invested substantial sums and are trying to start their businesses.
The Commission announced that the outside audit being conducted of the latest round of dispensary licensing (due to allegations of irregularities, cheating, and unequal treatment) is on schedule, and that the City will be providing further updates on the audit in the next week. The City previously announced the audit will be completed by mid-March.
At the meeting, LA Department of Cannabis Regulation Executive Director Cat Packer stated that, following the announcement of the audit results, the DCR will be presenting recommendations to the City Council regarding proposed changes to the licensing process in light of the audit results and public comments received over the past several months. The DCR will also be preparing a summary for the City Council of the various public comments it has received.
Cat Packer also noted that the DCR is working on adopting formal standards and policies regarding the Undue Concentration / Public Convenience or Necessity process for approving dispensaries in community plan areas that have already hit their soft caps of 1 licensed dispensary per 10,000 residents. She stated that ten areas within the City have already reached “undue concentration” (allowing PCN licenses to be issued in those areas), and that the City has already received 75 PCN applications. (For more information on the PCN process, see https://cannabis.lacity.org/licensing/PCN-1).
Packer also stated that the DCR is working on developing policy recommendations to send to the City Council regarding location changes of cannabis businesses. She stated that existing retail businesses will likely be restricted from moving for now due to potential interference with pending applications due to the 700-foot buffer zone rule between dispensaries. She stated that the DCR will likely provide recommendations at the next Cannabis Regulation Commission that existing cannabis manufacturers and distributors in the City (who applied for licenses in Phase 2 of the City’s licensing) be allowed to move anywhere in the City as soon as possible. She stated that there is a need for more conversation, and a more nuanced approach, regarding how existing cannabis cultivators in the City will be allowed to move. That is because the City is already at three times its “undue concentration” capacity for cultivation, based on the number of licenses issued in Phase 2, and the low undue concentration caps for cultivation.
Packer also discussed the recent changes to deadlines for Phase 2, non-retail license holders - setting May 15 at noon as the deadline for payment of license renewal fees and extending the deadline for requesting an inspection to June 3. She stated these dates were set with the expectation that the City will approve location moves before then, at which time those who moved would be given additional time to prepare for inspections at the new locations. In discussion, the Commissioners seemed to be in agreement that location moves need to be allowed soon and license holders need to be granted relief, as the current law prohibiting moves allows property owners to exploit tenants and bleed them dry knowing they cannot move without losing their licenses.
Packer announced that amendment forms are now being accepted at the DCR for any changes applicants want to make to their applications other than locations.
The Commission also discussed the possibility of cannabis dispensary applicants receiving “temporary approval” to operate as their applications are being processed. There appeared to be agreement that some form of temporary approval to operate would be allowed for whatever group of the current applicants moves forward to the next states of licensing, not necessarily the 100 invoices already issued, once those in that group passed a basic inspection. The Commission agreed that no one would be granted temporary approval to operate until after the current audit, which will likely affect which group of applicants moves forward.
Author: Raza Lawrence of Margolin & Lawrence.
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