Is Los Angeles Poised to Finally Have an Equitable Cannabis Industry?

The Los Angeles City Council is expected to vote today on far-ranging reforms of its adult use cannabis policies, with a focus on equity. One proposal, for example, would limit new delivery and retail licenses to social equity applicants until January, 2025. 

The Rules Committee met Tuesday morning to discuss the more than one hundred pages of reports containing proposed changes to licensing and social equity that the Department of Cannabis Regulation sent to the City Council last week. 

After kicking off equity licensing late last year, the city’s cannabis regulators have been criticized for moving too slowly on equity, have had to pause licensing amid an audit in response to allegations of an unfair licensing process, and have had meetings derailed by the COVID-19 pandemic. More than 800 applicants have been waiting, which has proven costly. During impassioned meetings, applicants have said that this is causing them to go into debt, fracturing personal and professional relationships, and leaving them vulnerable to predatory practices (from landlords, for example). 

Now, it seems like equity might have a clearer path. The DCR said in a statement last week that its position was that “immediate and comprehensive amendments are necessary for a more responsible and equitable Licensing and Social Equity Program,” and that will happen through “a proposed comprehensive reorganization” of the city’s cannabis policies. 

The Los Angeles Rules Committee voted Tuesday in favor of the overhaul outlined in the reports that DCR sent to City Council on June 16, which include the following “immediate policy objectives”:  

 • An expansion of how Equity Share is defined, and the creation of “related requirements to provide additional protections to mitigate against potential predatory practices.”

 • Limitation of new delivery and retail licenses only to social equity applicants until January 1, 2025.  

 • The creation of a process to grant all social equity license applicants temporary approval. 

 • The ability for cannabis businesses to relocate, a shift from the current policy that requires applicants to remain in the same location for the duration of the selection process. 

During Tuesday’s special meeting, Bobby Vecchio of the Southern California Cannabis Coalition said that he was “shocked” when he read the DCR’s proposed rules on delivery because he and others have been “waiting for years” to secure licenses for cannabis delivery. 

“While waiting, in order to remain legal, many quality operators were forced into predatory relationships with existing license holders. Now, after two years of making expensive, life altering preparations to apply for a license, the DCR is suggesting that nobody but social equity applicants should be able to apply for new delivery licenses for the next five years. Why?” Vecchio asked. “Especially with COVID, folks are relying more upon delivery than ever. Instead of standing by watching companies deliver into LA from outside city limits, which results in us losing tax revenue, we need to issue licenses to good local operators. The city’s delayed and mismanaged this licensing process in every conceivable way.” 

Lynne Lyman, coauthor and co-chair of Proposition 64, the voter initiative that legalized adult use cannabis in California, said that she supports the DCR’s “comprehensive reorganization and revision of the cannabis procedures ordinance that we’ve needed for a long time.” 

“If you pass these revisions, it saves me from having to draft and raise money for a ballot measure,” Lyman said. “Limiting retail delivery licenses to social equity applicants through the end of 2024, which is only three and a half years, not five, is a bold and much needed move. We all know social equity has been a failure here in LA and across most jurisdictions. Too many loopholes, too little time, too much greed.” 

Evelyn Scott, an applicant, said that she supports a lawsuit that has been filed by the Social Equity Owners and Workers Association against the DCR and the city of Los Angeles. 

“The application process was unfair and it disadvantaged hundreds of applicants,” Scott said, adding that she supports the DCR’s recommendation that all social equity applicants receive temporary approval. 

“We have endured enough. And we’re already going through so much with COVID. A lot of us have had our businesses looted, we’ve lost our properties,” Scott said. 

Another DCR objective would amend policy by identifying eligible social equity applicants through a lottery, “rather than an online, first-come, first serve process.” DCR executive director Cat Packer acknowledged at an October hearing that two applicants gained access to the online application portal before the September 3 launch because they reset their passwords moments before the 10 a.m. start time. This prompted Los Angeles Mayor Eric Garcetti’s call, in November, for an independent investigation, after which Packer announced that the application process would be put on hold until a third-party audit was completed.  

Packer also acknowledged frustration from the cannabis industry at a December Los Angeles Cannabis Regulation Commission meeting, saying, “I agree with many of the folks in this room who are frustrated by the hope that was presented by this department and by this Program. I didn’t think that it would take us this long to get to this point and I am disappointed with where we are at.” 

While cannabis regulators field much of the frustration, those regulators are also beholden to elected officials. At a March meeting held by the Los Angeles Cannabis Regulation Commission, a commissioner asked Packer about the lag in communication between DCR and City Council. Packer responded that her department used to be in front of them “much more regularly” but hasn’t since April 2019, adding, “So essentially, for almost a year now, we’ve been sitting on recommendations from the community and just waiting to pass these policy recommendations to the elected officials.”

In April, the California Governor’s Office of Business and Economic Development (GO-Biz) and the Bureau of Cannabis Control announced $30 million in funding through the Cannabis Equity Grants Program for Local Jurisdictions for cities and counties across the state. The City of Los Angeles received just over $6 million, second only to Oakland. 

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