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The Los Angeles Cannabis Permit Process

Phase 3 has not been scheduled yet in the worlds largest adult use market

With over 10 million residents in Los Angeles County, serving the needs of cannabis consumers is a monumental task. The Department of Cannabis Regulation (DCR) in Los Angeles is now in the process of awarding cannabis business permits.

California legalized adult, recreational use of cannabis in 2016 via Prop 64, which over 57 percent of voters approved. But it wasn’t until January 1 of last year that it actually became legal.  

In 2018, Los Angeles began issuing permits. Phase 1 got underway with licenses granted to 170 retailers that had been operating prior to 2007.

In 2007, concerned that too many shops were opening, Los Angeles made its first attempt to regulate the burgeoning medical marijuana industry by enacting the Medical Marijuana Interim Control Ordinance (ICO). It placed a temporary moratorium on new medical marijuana dispensaries. Despite the law, it was estimated that as many as 1,000 pot shops opened illegally in Los Angeles. By 2015, however, authorities had closed over 500 of them. It was determined that Phase 1 businesses were exempt from the ICO moratorium.

Last month, Phase 2 got underway. Phase 2 addresses the applications for non-retail commercial cannabis activity: cultivation, edibles production and other nonretail operations. The 600 applications are being reviewed. About 40 licenses have been issued thus far. Applicants are required to allow the DCR an on-site inspection in order to be eligible for a permit.

The Phase 3 process has not been scheduled yet. A DCR spokesperson explaned: “It doesn’t require any past business history in the city and is generally open to individuals and businesses that have not been previously engaged in cannabis activities. All applicants must meet numerous application requirements, including providing detailed operation plans and passing a pre-license inspection. Applicants that qualify under the Social Equity Program will receive processing priority over non-social equity applicants in Phase 3.”

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The stated goal of the cannabis Social Equity Program is to promote “equitable ownership and employment opportunities in the cannabis industry in order to decrease disparities in life outcomes for marginalized communities and to address the disproportionate impacts of the war on drugs in those communities.”

Through the program, eligible applicants receive benefits, including but not limited to, priority application processing, access to property and business, licensing and compliance support. 

Applicants are ineligible to apply for a license if they have certain criminal convictions: violent felony, violation of labor law, fraud, etc. The DCR may also deny an application for several reasons, such as if the applicant fails to comply with licensing requirements or makes a material misrepresentation on the application.

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