Los Angeles: Cannabis Business Licensing, Social Equity Will Face “Significant Changes”


In a series of recommendations to the Los Angeles City Council, the L.A.’s Department of Cannabis Regulation proposed a complete reform of the cannabis commercial licensing structure and social equity programs.

The DCR’s proposal is scheduled for consideration by the City Council Committee on Tuesday.

If these recommendations are adopted, it may be significant for many cannabis entrepreneurs who wish to obtain a city business license. Industry officials have different attitudes to these suggestions.

Supporters believe that the DCR’s recommendations represent the realization of the city’s widely criticized social equity projects.

However, critics believe that these proposals will deprive traditional operators. The latter are not qualified for social equity and have not yet obtained a license, causing more significant damage to the industry.

The proposal was submitted to the City Council last week. It was the first major initiative since DCR completed its independent review of the latest licensing round for 100 retail licenses last March. Since then, city permits have shelved.


The recommendations include:

  • Granting temporary approval for all social equity license applicants.
  • Allowing applicants and businesses to relocate within the city; currently, applicants are required to find a location and stick with it through the licensing process.
  • Limiting new storefront retail licenses and delivery licenses to social equity applicants until 2025.
  • Improving processes to minimize “predatory practices” in the social equity program.

The city council must first approve the implementation of the proposal. It is not clear whether the committee will choose to stamp or accept or reject specific changes.

When asked whether “temporary approval” for all applicants meant that DCR suggested increasing the number of available licenses, an agency spokesperson wrote in an email:

“many licensing and social equity program stakeholders have expressed support for additional retail licenses to be made available, and the Department agrees that it’s an issue worth deliberate consideration by policymakers.”

However, many observers believe that this not based on the political dynamics of the city council. The City Council has been reluctant to increase the number of legal cannabis business permits substantially.

The DCR proposal has also announced in a motion that, if approved, will restart the licensing process for the 100 retail winners in the social equity retail licensing round last September. Los Angeles City Councilman Marquees Harris-Dawson submitted the motion.

During the suspension of the licensing process, the 100 employees have been in trouble for more than nine months, which means they cannot open their stores.

The Rules Committee will also consider Harris-Dawson’s motion on Tuesday, and it is unclear how the entire committee will deal with DCR proposals.


Mixed reactions

Industry consultant Lynne Lyman said of DCR’s recommendations, “I think it’s fantastic,” she has been active in the field of marijuana politics in Los Angeles for many years and now works with industry clients.

“It’s like this big omnibus fix for the whole ordinance, and it really re-creates the social equity program to make it work, because it has not worked.”

Others said that because DCR recommends that all future retail licenses be granted only to social rights recipients, these recommendations will deprive anyone who is not eligible for social rights applicants from voting.

“This is a major course change because you’re saying, if you’re not a social equity applicant, you can’t get a license, at least until 2025,” said attorney Michael Chernis, who has clients both in the social equity program and outside it.

Chernis emphasized that he supports social equity programs, but he believes that this approach.

“Cut off any chance for anyone but a social equity applicant to get a retail license, a non-storefront retail license, or, as far as I can tell, any license for five years.”

“My initial reaction is it’s really unfair to people who are not social equity applicants because there are a lot of people who were waiting patiently to be licensed… resisting the temptation to operate illegally in the hopes of becoming licensed,” Chernis said.

This article is issued by Mjbiz Daily.

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Alina Xue
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