Big changes are coming for L.A.’s long-awaited Phase 3 licensing regarding storefront retail. The last time I wrote on this topic, the Department of Cannabis Regulation (“DCR”) made several proposals to City Council on how to re-vamp Phase 3 licensing for efficiency and expediency, which at the time the City Council pretty much rejected. However, last week, the Council came around and Phase 3 is going to look a lot different than anyone may have anticipated. Needless to say there are going to be some winners and a lot of losers in the City of Angels.
On March 8, City Council requested the City Attorney develop an ordinance (based on these instructions) to, among other things, overhaul Phase 3 licensing for type 10 retail storefronts. It’s no secret now that only 200 retail licenses remain in the City when you do the math on undue concentration limits. And all 200 licenses are destined for social equity applicants because of existing City laws. Previously, the DCR was weighing what to do with these 200 licenses–would they be given on a first come, first serve basis? Via lotto? Via merit? As of Friday, here’s how the City plans to proceed in Phase 3 regarding retail storefront licenses, which will now take place in two sub-phases:
In a 14-day window, the DCR will first process the initial 100 storefront licenses for folks who have been “pre-verified” as Tier 1 or 2 social equity applicants (there is no mention of Tier 3 applicants getting any kind of priority here). Pre-verification means that the applicants can prove how they meet their social equity tier and that they ink an indemnification agreement with the City. Plus, those Tier 1s and 2s, at the time of application submission to ensure a complete application, also have to meet “basic qualifications,” which are to:
- provide a signed lease with proof of payment or deposit, or a property deed;
- meet all sensitive use requirements, including undue concentration;
- pay of required license fees;
- provide ownership organizational structure;
- provide financial information;
- provide proposed staffing plan;
- provide complete and detailed diagram;
- provide proposed security plan;
- provide the applicable radius map;
- provide a labor peace agreement; and
- demonstrate compliance with the City’s Equity Share rules (I.e., tier 1s get 51% of the business and tier 2s get 33%).