Los Angeles: Another Phase III Cannabis Business Licensing Update

On March 8, 2019, the Los Angeles City Council met and adopted the recent recommendations from the Rules, Elections, and Intergovernmental Relations Committee (“Committee”) regarding updates to the Department of Cannabis Regulation’s (“DCR”) licensing process. By adopting the recommendations, City Council requested that the City Attorney, with the help of the DCR, prepare and present an ordinance that makes a number of changes to existing DCR policy and Phase III of the City’s cannabis licensing process.

The adopted recommendations include the creation of a two-part Phase III licensing process for Type 10 storefront dispensary applicants. The licensing process will start with a pre-vetting process for Social Equity Applicants for retail commercial cannabis activity followed by a two-part application process for Type 10 storefront retail licenses.

Part One of the Storefront Cannabis Retail Licensing Process in Los Angeles

Part One of the cannabis licensing application process will include 100 licenses, 75 of which will be reserved for Tier 1 Social Equity Applicants (unless the DCR is unable to identify 75 qualified Tier 1 applicants). The application window will only remain open for 14 days. The first 100 applicants (as determined on a first come first served basis by the date and time an applicant’s final submission is made to the DCR) that meet all the basic qualifications set forth by the DCR will be eligible for further processing. The basic qualifications include:

  1. A signed lease with proof of payment or deposit, or a property deed;
  2. Meet all sensitive use requirements, including undue concentration;
  3. Payment of required license fees;
  4. Ownership organizational structure;
  5. Financial information;
  6. Proposed staffing plan;
  7. Indemnification;
  8. Complete and detailed diagram;
  9. Proposed security plan;
  10. Radius map;
  11. Labor peace agreement;
  12. Current Certificate of Occupancy; and
  13. Compliance with the Equity Shares rule.

It is important to note that only one application per applicant will be accepted during Part One and Phase 1 Type 10 license holders are not eligible to apply during Part One.  

Part Two of LA’s Phase III Cannabis Dispensary Licensing Process

Part Two of the licensing process for Type 10 storefront dispensary applicants will begin at the discretion of the DCR but no sooner than 30 days after technical assistance is made available to Social Equity Applicants. Based on prior information provided by the DCR, such assistance will not be available until July 2019 at the earliest. Part Two will make another 100 licenses available, however, in Part Two there will be no priority differentiation between Tier 1 and Tier 2 Social Equity applicants. Additionally, the list of basic qualifications that must be met in order for an applicant to move forward in Part Two is initially less robust than in Part One. Notably, a signed lease and meeting all sensitive use requirements (including undue concentration) are considered “additional qualifications” that must be met within 90 days of the time of application rather than upfront. 

All Phase III storefront dispensary applicants should note that they will not be allowed to relocate their premises at any point during the licensing process. Additionally, the individual that enabled the applicant to qualify as a Tier 1 or Tier 2 applicant must remain on the application with the required Equity Share during the entire licensing process (51% for Tier I and 33% for Tier 2).  

Unfortunately, we still do not know when Phase III will begin, however, those wishing to snag a Type 10 storefront license during Part I of Phase III can start prepping their “basic qualification” documents now to ensure that they are ready to submit a complete application as soon as the application window opens.

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