California Cannabis
Gone in 60 days: L.A. releases its priority marijuana dispensary applications.

On December 31, L.A. established its long-awaited Department of Cannabis Regulation (“DCR”) website. The website details L.A.’s three licensing phases (of which general public processing is in the last category) and an FAQ page about the licensing process.

Today, DCR released applications for priority processing of those qualifying Pre-ICO/Prop. D dispensaries–see here. This means that existing medical marijuana dispensaries (“EMMDs”) in compliance with the city’s limited immunity provisions (i.e. dispensaries that received 2017 L050 BTRCs or that received a BTRC in 2007, registered with the City Clerk by November 13, 2007 (in accordance with the requirements under Interim Control Ordinance 179027), and received a L050 BTRC in 2015 or 2016), and that are current with City taxes are now eligible to apply for temporary approval and a city license to operate under MAUCRSA. Temporary approval is different from actual licensing–it allows the EMMDs to operate with limited immunity while their licensing applications are pending.

Importantly, EMMDs only have 60 days from today to submit their applications, which is not as simple as it sounds. Los Angeles’ license application is very similar to the State of California under the Bureau of Cannabis Control regulations, which means applicants need to be prepared for an information dump to the DCR and Cannabis Regulation Commission in the form of corporate and operational information and plans.

Here are select highlights of what the EMMD license application requires (again, EMMD temporary approval is a different process):

  • General information about the business applicant, including a copy of the articles of incorporation (since most if not all EMMDs are non-profits of some kind).
  • Disclosure of all other licenses, permits or authorization the applicant has received and disclosure of whether the applicant and/or its directors/managers had ever been denied the right to conduct commercial cannabis activity anywhere.
  • Provision of all the same financial information that is required by the state under MAUCRSA. This includes listing all funds belonging to the applicant, all loans made to the applicant, all investments made to the business, and all gifts of any kind given to the applicant for conducting commercial cannabis activity. Furthermore, details like information of money sources, dates of transactions, terms of deal, etc. are also required to be submitted.
  • Proof of the applicant’s legal right to occupy the business premises, which means either providing an affidavit from the landowner or a copy of the title or deed. General information about the property is also required, which can mostly be found in the lease agreement (which is also required to be provided if the property is being leased).
  • Security plans must be submitted that explain the premises’ video surveillance system, access points to the business, description of fire-proof safe and practices for allowing access to limited-access areas of the business. The applicant will also have to provide detailed descriptions for how they will meet standards for track-and-trace, inventory, returns, destruction of products, waste management, environmental sustainability, records retention and operational requirements.
  • A complete and detailed premise diagram is required for submission.
  • Representation that they have received, or are in the process of getting, insurance and/or a bond.
  • A proposed Community Benefits Agreement as required by the DCR.

Most importantly, all applicants, including EMMDs, in addition to a pre-license inspection of the business premises, must submit to a public hearing before the Cannabis Regulation Commission (which is the government body that ultimately determines if the EMMD is licensed) before they can receive their license. Once the DCR determines that an application is complete, applicants must notify all owners and occupants of all property within 500 feet of the property line of the lot where the business is located. All of these folks are entitled to notice that an application has been filed near them, and all of them are entitled to show up at the public hearing.

Getting a license in the City of Los Angeles is not going to be easy (or cheap), but it is necessary for any dispensary to continue to operate under MAUCRSA and  undertake adult use sales. (Only two L.A. County cities have allowed recreational sales so far, so that’s a significant development). Note that any EMMD that does not submit an application within the next 60 days will be stuck in the third-phase general public bucket. That’s not a great place to be: there is still no starting deadline for those applications.