New Cannabis Procedures Ordinance in LA: A Step in the Right Direction

Recently, the Los Angeles City Council voted unanimously to tighten the restrictions on the city’s Cannabis Procedures Ordinance, meaning that new applicants to the social equity program will have more stringent requirements for licensing, tightening the loopholes that made the original ordinance ineffective:

• Through January 1, 2025, the Department of Cannabis Regulation (DCR) will limit all new applications for Type 9 (Delivery) and Type 10 (Retail) businesses to social equity applicants. There will be an unlimited number of Type 9 licenses awarded to social equity applicants. This enables more social equity applicants an opportunity to establish a business of their own.
• Instead of designating social equity areas by zip code the city will now narrow eligible areas to police reporting districts. The zip code areas included wealthier areas along with poorer ones with higher levels of marijuana crimes, but the new designated areas will allow more representation for the communities that have been most drastically affected by the War on Drugs.
• The new social equity requirements are more stringent. In order to participate in the lottery system, applicants must have a California cannabis arrest or conviction and they must be either low-income or have lived at least 10 years in one of the areas most affected by cannabis arrests. Previously, applicants who lived in designated areas didn’t have to have an arrest or conviction. Now, those people are still able to pursue licenses for other types of cannabis businesses.
• Partnerships with investors are being monitored more closely. The new ordinance should help minimize the predatory agreements that have sometimes occurred when a social equity applicant is beholden to their investors. Applicants in the new system must have enough control of their business to be the primary decision makers.
• There are new rules for allowing licenses for new shops in saturated areas. Applicants must get written input from the neighborhood council and others and the city council must make specific findings to grant permission for shops in these areas. In addition, applicants must go through the Public Convenience or Necessity Application Process (PCN). If a proposed location is in a Community Plan Area that has reached Undue Concentration, a PCN finding from the Los Angeles City Council is required before the DCR can accept and process the application. A $1499 PCN fee must be paid within 10 days of receiving an invoice from the DCR, in order for the request to be sent for City Council consideration. If the fee is not paid within 10 days, the PCN request is considered abandoned.
• The city council now has about three months to act on applications in saturated areas. In the past, if the council didn’t approve the request promptly, it was automatically approved. Now, the requests will be denied if the council hasn’t acted in approximately three months.

We’re excited to see the city of Los Angeles make a commitment not only to social equity applicants, but to the cannabis community as a whole. The city council is making an effort to support the areas of the city that need it most, helping to reduce the predatory practices and increase the number of minority business owners in the city.

Read the full ordinance.

Find out more about the Public Convenience or Necessity Application Process (PCN).

Learn more about California’s social equity program in cannabis from Marijuana Business Daily.

Find out more about the Public Convenience or Necessity Application Process (PCN).