As the Phase 1 permit window for Los Angeles Proposition D compliant Existing Medical Marijuana Dispensaries (EMMD) is about to close, the City of Los Angeles has not yet publicly announced the opening of the Phase 2 cannabis permit application window.
A Phase 2 applicant is a “Non-Retailer Commercial Cannabis Activity” who was “engaged prior to January 1, 2016, in the same Non-Retailer Commercial Cannabis Activity that it now seeks a License for and provides evidence and attests under penalty of perjury that it was a supplier to an EMMD prior to January 1, 2017.” The LA marijuana business premises must also meet Los Angeles zoning and sensitive use requirements without any fire or life safety violations and pass a pre-license inspection. Among other operational requirements, all outstanding Los Angeles City business tax obligations must be paid, and the City must be indemnified from any potential liability. See the full text of the Los Angeles Municipal Code re Cannabis (Article 4 to Chapter X of the Los Angeles Municipal Code).
The immediate concern for Phase 2 Los Angeles marijuana business applicants is that the window for applications under Phase 2 closes on April 1, 2018, yet the City of Los Angeles has not announced when a Phase 2 LA marijuana business applicant can file an application. The application period narrows every day for pre-existing non-retail Los Angeles cannabis businesses.
In addition, the City of Los Angeles has not yet publicly announced when the Phase 3 application process for general Los Angeles marijuana business applicants will begin or end. However, the question becomes, what additional cannabis business locations, if any, will be available to Phase 3 LA City marijuana business applicants. Of course, without a local license, marijuana businesses are precluded from applying for a California state cannabis license.
While most people familiar with the regulation of cannabis businesses are accustomed to zoning limitations and proximity to sensitive use regulations, the City of Los Angeles codified another marijuana regulation that will ultimately limit the number of LA cannabis businesses regardless of zoning or proximity restrictions – Undue Concentration.
Simply put, a Phase 3 marijuana business applicant may comply with all Los Angeles land use and zoning restrictions, but not receive a permit based on Undue Concentration of a particular type of marijuana license in a specific LA Community Plan area. See the City provided Los Angeles Cannabis License Capacity list of maximum number of cannabis businesses per type including retail, microbusiness, cultivation, and manufacturing.
The City of Los Angeles states that this is a “Soft Cap”; however, an applicant for a cannabis business permit located in an area of Undue Concentration must request the LA City Council find that approval of the cannabis license application would serve public convenience or necessity.
Los Angeles is the largest US City in the United States to legalize recreational use cannabis businesses, but it remains to be seen how that legalization will progress.
Contact us to learn more about California state or local cannabis regulations, cannabis regulatory compliance, and cannabis litigation.