As voters decreed with the passage of Measure M in March of this year, the sale of marijuana for both recreational and medical uses will become legal in California on January 1, 2018. And to make sure that there is a new regulatory structure in place, along with effective enforcement strategies, the L.A. City Council has been working at warp speed to create a group of new ordinances to outline how the city will oversee the new business activity, where cannabis businesses can be located, who can apply for permits to run them, all the minutiae of running such businesses legally…and an effective enforcement plan. The last big ordinances in the package were passed by the full city council on December 6, and will now go into effect with the new year. Here’s a summary of what’s to come.
All cannabis business activity in Los Angeles will now be overseen by a new Department of Cannabis Regulation, created last summer in the first major piece of legislation in the package. The Department is headed by Cat Packer, whose official title is Executive Director of the department, and who was instrumental in helping craft the other parts of the new regulatory scheme. (At the final Dec. 6 hearing, City Council President Herb Wesson singled out Packer for high praise, saying she “earned her stripes” on this issue with her assistance both behind the scenes and at the hearing.)
In general, cannabis retail sales locations must be a minimum of 700 feet from “sensitive uses” such as schools, public parks, public libraries, child care centers, alcohol and drug treatment facilities, and other marijuana sales locations. With these parameters, it appears that in our part of City Council District 4, the only areas where a significant concentration of parcels would qualify for retail cannabis business licenses, based on the various distance requirements, are the Wilshire/La Brea area, Larchmont Blvd., and The Grove, with a much smaller area of allowed parcels in the far northeast corner of our general neighborhood. (See the map above.)
Other kinds of cannabis-related businesses (including cultivation, manufacturing, delivery, and “microbusinesses”) will have similar (but not identical) location requirements, depending on the business type.
Also, to prevent over-concentration of cannabis businesses in any one area, there can be no more than one retail cannabis business licence per 10,000 residents in any Community Plan area…which equates to a total of about 29 such licenses in our Wilshire Community Plan area, which has 289,139 residents, according to city data.
All marijuana businesses must obtain both state and city licenses to operate legally in Los Angeles. In addition to abiding by all of the location and concentration restrictions above, other conditions will apply.
For starters, cannabis business licenses may not be issued to anyone who:
- has been convicted of illegal volatile cannabis manufacturing in the last five years
- has been convicted of violating a state or local wage or labor law in the last five years
- has been convicted of violating a state or local law involving distribution of cannabis to minors in the last five years
- is incorporated outside of the United States
- has been convicted of selling or distributing tobacco or alcohol to minors in the last five years
- has been convicted of a felony in the last 10 years for violent crimes, sex trafficking, rape, crimes against children, gun crimes or hate crimes
- or who is a licensed retailer of alcoholic beverages or tobacco products at the business premises
It’s also worth noting that:
A licensed cannabis retailer may only do business with other fully licensed cannabis vendors (suppliers, packagers, delivery services, etc.)
No one person may be involved with more than a total of three separate cannabis business licenses.
License applications will go first to the Department of Cannabis Regulation for review. After the review, the DCR will recommend either that the license be approved or denied. If the DCR recommends approval, then the application will move to the appropriate Area Planning Commission for a public hearing and final approval or denial.
Notice of all license applications and APC hearings will be sent to the appropriate Neighborhood Councils, as well as to all residents and property owners within a 500-foot radius of the proposed license location.
Every license must be reviewed annually by the city.
And, finally, existing medical marijuana dispensaries that were permitted under the city’s previous Proposition D rules will be allowed to continue operations under a grace period while they apply for the new licenses.
Social Equity Program
A significant part of the new cannabis regulatory scheme is a “Social Equity Program” designed to help remedy past injustices in concentration, enforcement and convictions for marijuana sales, which were disproportionately centered in low income neighborhoods and communities of color. To help make up for those past inequities, the city has created a three-tier system for disadvantaged applicants, to give priority to those who may have been most negatively affected by past inequities.
The major categories of people who will benefit from the tiered system include those who are low income (earn 80% or less of the city’s Area Median Income), those who were convicted of a cannabis-related crime prior to November 8, 2016 and could have been prosecuted as a misdemeanor or citation under current California law, and those who live in a “Disproportionately Impacted Area” for past cannabis-related activities.
Applicants in Tier I of the new equity structure are those who are both low income and have a prior cannabis conviction…or who are both low income and have lived for at least five years in a Disproportionally Impacted Area. These applicants must also own at least 51% of a cannabis business. As incentives, they will receive business, licensing and compliance assistance, expedited renewal processing, program site-specific conditions, the potential for fee deferrals (if the City adopts them in the future), and access to an Industry Investment Fund, if one is established.
Tier 2 Social Equity applicants are those who are low income and have lived for at least five years in a DIA, or who have lived at least 10 years in a DIA but are not necessarily low income. These applicants must own at least 33 1/3 equity in a cannabis business. They will receive business, licensing and compliance assistance, expedited renewal processing and program site specific conditions.
Tier 3 applicants are those who provide capital, leased space, business, licensing and compliance assistance to Tier 1 or Tier 2 applicants. They must provide those applicants access to property with no rent and with prorated utilities for a minimum of two years. In return, Tier 3 applicants will receive expedited renewal processing and program site specific conditions.
Other conditions apply for business applicants in all three tiers, based on the type of business they will be operating.
The list of required operating conditions for retail cannabis businesses is long, but here are a few of the highlights:
The business’s license must be prominently displayed at the business location, in a manner that makes it readable from the exterior of the business.
There must be a designated supervisor, manager or person-in-charge at all times during regular business hours.
Each business must have a designated Neighborhood Liaison, and their name and contact information must be displayed at all times, in a manner readable from the exterior of the business.
Every licensee must attest that they will not manufacture, prepare, package or label any products other than cannabis products or accessories related to cannabis use at the business premises.
Business audits and inspections by the city can be made at any time, without notice.
Businesses may use only the name they were licensed under.
Every licensee must make a “good-faith effort” to have at least 30% of the weekly hours of its employees be from employees who live within three miles of the business, and 10% of the weekly hours contributed by employees who are “transitional workers” (those who reside in an Economically Disadvantaged or Extremely Economically Disadvantaged Area, and who face at least two of the following barriers to employment: homelessness, being a custodial single parent, receiving public assistance, lacking a GED or high school diploma, having a criminal record or other involvement with the criminal justice system, suffering from chronic unemployment, emancipated from the foster care system, being a veteran, or over the age of 65 and financially compromised.)
Every cannabis business must have an approved security plan (including high-resolution camera system,and on-site security personnel who not employed directly by the cannabis business)
No recommendations or approvals by a physician to use cannabis can be issued at any business.
No consumption of cannabis will be allowed on the premises.
No samples of cannabis products will be provided, either by the business or its suppliers.
All cannabis products must be inspected and labeled within 120 days of licensing, or by April, 2018, whichever is sooner.
All graffiti will be removed within 24 hours.
Trash collection can happen only on weekdays from 7 a.m. to 8 p.m, and 10 a.m. to 4 p.m. on Saturdays.
Sales and deliveries can only take place during hours specified by state laws.
No entertainment activities, equipment or special events are allowed on the premises.
There can be no outdoor speakers, address or pagying systems.
Front windows must be at least 50% transparent.
And finally, all licensees must comply with all applicable terms of the L.A. Municipal code, including zoning, Building and Safety regulations, parking requirements spelled out in Community and Specific Plan areas, street dedication and improvement requirements, and citywide design guidelines.
In addition to the licensing, inspection and operational terms above, within five years of discovering any violations at a cannabis business, the city can issue a Notice of Violation.
Violations can be classified as Minor, Moderate and Serious, depending on the type and/or frequency of the violation. Multiple violations in any category can result in increased fines and escalation to higher classes of violations. Fees for Minor violations are equal to 50% or the current license fee for that business category. Fees for Moderate violations will be 150% of the current license fee, and fees for Serious violations will be 300% of the current license fee.
While it appears from the location information above that this new business activity may appear in at least a few of our mid-Wilshire neighborhoods, there has been surprisingly little official conversation or response from local neighborhood groups so far, even those that do frequently weigh in on various zoning and regulation issues.
Representatives of both the Greater Wilshire Neighborhood Council and the Mid-City West Community Council said their groups have not officially discussed or voted on the topic (though 14 other NCs, in other parts of the city, did file comments, Community Impact Statements and suggestions during the months the new regulations were being developed).
And the local neighborhood associations representing smaller areas most likely (based on the location parameters) to host new cannabis retail businesses – Miracle Mile, Sycamore Square, La Brea-Hancock and Windsor Square – have been similarly silent, as have local business organizations.
But whether the silence indicates satisfaction with the process, disinterest, a shrug of inevitability…or simply a “wait and see” posture remains to be seen.
Tom Kneafsey, head of the Larchmont Village Business Improvement District, told the Buzz shortly after the new ordinances were passed, “Based on the uproar from the community the last time a pot shop tried to open on Larchmont, I’d be surprised if that type of business would be successful on Larchmont.”