ICYMI: More Changes to City of Los Angeles Cannabis Laws and Regulations

13 Aug ICYMI: More Changes to City of Los Angeles Cannabis Laws and Regulations

The City of L.A. has had no shortage of tweaks and changes to its cannabis laws and regulations over the past four years. Admirably, as industry issues have arisen, the City and its Department of Cannabis Regulation (“DCR“) have tried to keep pace. At times though, that pace has been glacial much to the chagrin of cannabis businesses in the City. These recent round of changes though will hopefully make life easier for L.A.-based cannabis businesses.

In case you missed it, back in June, the City instituted some fairly significant changes to Articles 4 and 5 of the Los Angeles Municipal Code (“LAMC”). In particular, the Los Angeles City Council adopted Ordinances No. 187094 and No. 187095 (effective July 1, 2021), respectively, modifying the City’s 2017 location restrictions for commercial cannabis activity, including minor changes to the way certain sensitive sites are defined, as well as to the rules for grandfathering of Existing Medical Marijuana Dispensaries (“EMMDs”), and further detailing/amending the PCN process as well as modifications to license applications, Temporary Approval, requests for changes to the business, and certain social equity standards (among other things).

Here are the highlights from Ordinance No. 187094:

• Modifies the definition of “Public Park” to include public parks located outside of
  Los Angeles city limits and clarify that the definition includes OS Open Space zoned properties only if those properties have park and recreation facilities. New cannabis retailers will be subject to the revised definition of Public Park, meaning that they will be prohibited from operating within 700 feet of parks located in neighboring cities or unincorporated areas, as well as within 700 feet of “OS” zoned properties that are used as park and recreation facilities, including but not limited to trails, lawn areas, play areas, child care facilities, picnic facilities, and athletic fields. Additionally, all new cannabis businesses will be evaluated for compliance with sensitive site distance buffers based on the sensitive sites existing and publicly available to DCR as of the date of
  application.
• Requires applicants for new licenses to observe minimum distances from the applicable sensitive sites in existence and publicly available to DCR on the date of the license application, rather than the date the license is received.
• Allows EMMDs to continue operating in their existing locations through December 31, 2025, after which they must comply with the City’s current cannabis location restrictions.
• Removes the requirement for EMMDs to comply with a legacy provision of Proposition D restricting the business premises from being accessed through a door opening facing residentially zoned property, provided that the door is used only by employees, vendors, and contractors and is not available for use by customers.

Here are the highlights from Ordinance No. 187095:

• Proof of a State license is no longer a prerequisite for Temporary Approval. DCR is no longer providing standalone letters or Notices of Local Compliance Underway. DCR will assign a status of “Local Compliance Underway” to DCR Licensing Portal records in accordance with the Temporary Approval workflow and information and procedure bulletin. Applicants will receive an email when their record status is updated to “Local Compliance Underway” along with information related to the Initial Inspection process. DCR will subsequently report a status of “Local Compliance Underway” directly to the Department of Cannabis Control as part of the State’s provisional licensing process.
• Beginning September 1, 2021, applicants will no longer be required to register an intent to submit a modification request prior to the submission of the request. Modification requests will continue to be accepted exclusively through the DCR Licensing Portal. Upon submission of the modification request, the Applicant or Licensee shall submit all additional documents and information deemed necessary to process the request through the DCR Licensing Portal and pay any additional modification fees pursuant to Section 104.19. Modification requests shall not be deemed filed or processed until all required documents, information, and fees have been submitted.
• Also beginning September 1, 2021, only Licensees may request certain modifications to their existing businesses. Notably, regarding changes of ownership, DCR’s current position is that “At least one owner with an ownership interest must remain on the License for the business to continue operations while DCR reviews the eligibility of the new Owner(s) pursuant to LAMC section 104.03(a)(1) and (2). If all Owners will be transferring their ownership interest, the Applicant or Licensee shall resubmit all application documents and pay all required application fees. The business shall not operate under the new ownership structure until a new License has been issued by DCR.” Social equity individual applicant owners are not allowed to be removed or replaced after filing for a license.
• The DCR issued an instructive table regarding certain business modifications, when they can be made during the licensing process or post-licensing, and what must be filed with the DCR to effect the change. See here:
• 
• Despite the foregoing clarification on modifications, a major disclaimer issued by DCR is that “Due to Ordinance Nos. 187904 and 187095, the [DCR] Licensing Portal may be unavailable and/or have limited functionality from July 6 to October 1, 2021 so the system may be updated to reflect the ordinance amendments to the LAMC. During this time, applicants will be unable to submit new Pre-Applications for any license types, including Delivery, Manufacturing, Distribution and Testing.  Between July 6 and October 1, DCR will continue to process existing applications and modification requests.”
• On October 1, 2021, if an applicant is seeking a modification that cannot be effectuated through a modification request, an applicant may submit a new Pre-Application. Modification requests submitted prior to September 1, 2021 may be considered regardless of application or license status.
• Regarding relocation requests, there will be no operation at a new location until Temporary Approval is received at that new location, and if you already have Temporary Approval at your old location, you must now cancel that Approval at that location before the DCR will approve the relocation.
• A CEQA analysis, if applicable, must now be conducted/underway with the filing of an annual City license application (rather than at Pre-Application).
• Concerning social equity applicants operating cannabis businesses, it is no longer required that the social equity individual be the highest officer of the business.
• Regarding Round 2 of Phase 3 licensing, through a lottery, the DCR may select for further processing as many eligible social equity applicants as there are total available licenses until under undue concentration limitations reached in given community plans. Further, Round 2 social equity applicants have a maximum of 1 year from the lottery to find property in any community plan on a first come, first serve basis until undue concentration is reached.

I recently put up a post about how powerful the locals are when it comes to barriers to entry in cannabis. The City of L.A. is an incredibly good example of how heavy local control really is in most cannabis states. In turn, cannabis licensees in L.A. need to stay as up to date as possible regarding these continuous updates to the LAMC in order to ensure that they remain in compliance with local laws. A misstep or failure to keep up can cause massive delay, expense, and headache.