DCR Accepting Applications for Undue Concentration in Los Angeles

Posted by Zachary Tucker on September 17, 2019


 

Don't panic. Although the first application cycle for cannabis retail licensing in the City of Los Angeles closed this morning, the real fun is only beginning. After today, the City’s Department of Cannabis Regulation (DCR) will begin to process and review applications submitted in Round 1. Over 800 applications were submitted in the first round, but only 100 applicants will be issued a license through this electronic process. Applicants who are unable to obtain a license in Round 1 of Phase 3 will be eligible to apply for one of the 150 licenses to be issued in Round 2, although it is anticipated that the final round will yield an even larger applicant turnout. However, applicants can apply for a license in an area of undue concentration, and there is no limit on the number of licenses that can be issued through the undue concentration process. Under Los Angeles Municipal Code (LAMC) SEC. 104.20 (Part a.), the number of Social Equity licenses to non-Social Equity licenses is 2:1, which means that if 190 licenses were issues through Measure M Priority Round 1, 380 should be issued through a combination of Round 1 and Round 2 Phase 3 processing, and the "Public Convenience or Necessity (PCN)" process (for areas of undue concentration) described below. If the city abides by its own ratio, 130 retail storefront licenses will be authorized in addition to the 250 through the electronic process. 

Alternative Dispute Resolution in Cannabis

Posted by Margolin & Lawrence on September 12, 2019

On September 12th, M&L partner Raza Lawrence participated in a roundtable discussion with a group of attorneys in Downtown LA regarding alternative dispute resolution in cannabis law.  This is a growing field becoming more and more important for people operating or starting a cannabis business.  Starting a new cannabis business can be complicated, lengthy, and expensive, often including multiple investors, loans, licenses, employees, asset purchases, and phases of construction.  As people adapt to the new licensed and regulated system, they are forming new companies and making large investments, and want to have ways to make sure their investment is protected and any disputes are resolved efficiently and fairly.

Now, commercial cannabis operators in California need both local and state licenses, and to comply with detailed local and state regulations.  In Los Angeles, the structure and procedure of licensing is complicated further by the social equity program requiring many dispensary licenses to be majority-owned by social equity candidates who meet certain qualifications based on their history of living in certain parts of the city, being arrested for cannabis crimes, and being low income.  In addition, cultivation, manufacturing, and distribution licenses in Los Angeles remain tied to “priority” applicants who can show a history of operating in the City, further complicating the business structures.  


Disputes and problems inevitably arise when starting any business, even with the most careful plans.  This is especially true with California’s complicated and changing cannabis laws, and the continued conflict with federal law.  Until recently, California did not regulate or license commercial cannabis businesses.  Instead, there was an affirmative defense to the criminal laws to people who operated as nonprofit medical marijuana collectives, jointly owned by all members.  Collectives and medical marijuana operators were frequently arrested and prosecuted even when they tried to do things the right way, and laws were vague and unpredictably enforced.  People tended to keep few if any records, because they did not want to keep evidence of criminal activity.  Many cannabis businesses today are continuations or offshoots of these earlier, unregulated businesses, and have some disputes and growing pains when trying to adapt to the new laws.


People in the cannabis industry have traditionally shied away from courts , preferring to resolve disputes through informal means.  That is because what happens in court becomes public record, and testimony and evidence presented in court could incriminate people for violating state or federal criminal laws, or even lead to asset forfeiture.  For licensed operators, testifying in court continues to incriminate them under federal law.  Distributing cannabis remains illegal under federal law, a felony with potential long jail sentences and asset forfeiture.  While there are legal protections against prosecutions for state-licensed medical cannabis operators, the federal law complicates the legal landscape, making court results unpredictable.  It can be difficult to even enforce a cannabis-related contract in court, given the federal illegality.  Under the US constitution, federal law controls over state law when there is any conflict in the laws, including in the area of cannabis.  In addition, many judges and courts start out biased against cannabis, having prosecuted and convicted cannabis defendants with felony charges for years.


Today, as people try to get their companies off the ground and adapt to the new legal regime, they need efficient and effective ways to resolve their inevitable problems and challenges.  Court cases are expensive and take a long time.  Arbitration and mediation can be much faster and cheaper, and a way to avoid potentially biased and uninformed judges.  For all these reasons, we recommend that parties include alternative dispute resolutions in their contracts, requiring the parties to submit any disputes to mediation or arbitration and bypass the traditional court system.  This way, parties can select someone they trust to resolve their dispute, using a transparent process agreed to by everyone.


Our law firm has helped numerous people and businesses resolve disputes relating to commercial cannabis.  If you have a dispute involving your business, or are looking for ways to avoid them, you can contact our firm for help you find a solution.

Phase 3 Round 1 Application Aftermath:

Posted by Margolin & Lawrence on September 5, 2019

Just yesterday, the Department of Cannabis Regulation (DCR) opened up the application process for Round 1 of Phase 3 retail storefront licenses in the City of Los Angeles. Due to heavy restrictions and high demand, appropriate locations for these storefronts can be difficult to come by. Many applicants have locations which meet all guidelines, yet still fall within a community plan area that has reached “undue concentration.” Here’s the 411 on what is expected to happen after the opening of Phase 3 Round 1 applications:

City of Los Angeles Implies It Will Soon Accept Applications in Areas of Undue Concentration

Posted by Zachary Tucker on August 19, 2019

 

Los Angeles Releases Final Application for September 3rd Licensing Cycle

Posted by Zachary Tucker on August 17, 2019

 

Everything You Need to Know About Los Angeles Phase 3 Licensing

Posted by Margolin & Lawrence on July 28, 2019

 

Los Angeles Update: Social Equity Deadline (Reminder)

Posted by Sara Adams on July 23, 2019

  Individuals interested in Phase 3 Retail and Delivery licensing must submit SEP eligibility verification documents for review by DCR Staff.

 

 

Why must I complete the SEP Applicant Eligibility Verification Process?

In order to be eligible to apply in Round 1, Round 2 and the Delivery Pilot in Phase 3, potential social equity applicant must complete this.

 

When must I do this by?

July 29th, 2019 is the deadline.

 

Who is eligible to participate in the City’s Social Equity Program?

Individuals who are considered low income ($45,644 or less), have past cannabis arrests and or convictions and those that live in Disproportionately Impacted Areas (districts with the highest cannabis-related arrests) are eligible to participate in the City’s Social Equity Program. (https://cannabis.lacity.org/licensing/social-equity-program). Check to see who qualifies for social equity and priority processing for licensing by taking the quiz linked below.  

Please see our quiz on eligibility. (click link)

The City of Los Angeles confirms that there is no maximum number of individuals who can be verified during the SEP Eligibility Verification Process. Therefore, it is not too late to be able to apply for a retail license during Phase 3!

 

What is the SEP?

The SEP provides applicants assistance in navigating the City’s cannabis licensing process – whether it be technical or business related.  This is especially helpful for first-time legal cannabis business owners.

However, if you have additional questions on how to operate a licensed cannabis business, please ask our attorneys at Margolin & Lawrence as the Social Equity deadline is quickly approaching! We are proud to be one of the few jurisdictions in the United States that is persistent on addressing those that are disproportionately impacted by the War on Drugs.

 

 

 

 

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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.

Undue Concentration

Posted by Raza Lawrence on June 25, 2019

     

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

Posted by Zachary Tucker on June 13, 2019
 

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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.