LA Cannabis Phase 3 Update - Round 2 Increased to 150 Licenses & other news

Phase 3 Update - Round 2 increased to 150 licenses & other changes


The new LA Phase 3 cannabis draft ordinances were presented and considered at last week’s City Council Rules Committee meeting. The Committee came back with recommendations and instructions for the City Attorney and DCR. A new ordinance will be presented for review at an upcoming meeting.

By way of background, the current proposal would have Phase 3 opening first for a social equity vetting phase, then three rounds of licensing within Phase 3.

  • Phase 3 - Round 1 will issue 100 retail storefront licenses (with the goal of 75% of those going to Tier 1 social equity applications, the remainder to Tier 2 social equity applications)

  • Phase 3 - Round 2 will issue 150 (see below) retail storefront licenses to Tier 1 or Tier 2 social equity applications

  • Phase 3 - Type 9 Delivery Pilot Program - will issue 60 licenses total for retail non storefront, 40 of those to Social Equity applicants and 20 to general applicants.

LA Phase 3 licensing under the current ordinance and Rules Committee recommendations.

LA Phase 3 licensing under the current ordinance and Rules Committee recommendations.

Phase 3 Round 1 and Round 2 applicants for retail storefronts will need to comply with Undue Concentration limits. Additionally, the criteria for the social equity program are outlined here.

Here are the key takeaways and changes from the previous draft ordinances from the recent meeting:

Number of Licenses for Phase 3, Round 2 increased to 150

The Committee recommended raising the number of licenses issued for retail storefront in Round 2 of Phase 3 to 150. This creates significantly more opportunity to obtain a retail license than previous versions.

Management Contracts - Minimum Standards

The Rules Committee instructed DCR to come back with specific instructions on minimum standards for Management Contracts.

Social Equity Agreements - Minimum Standards

The Rules Committee instructed DCR to come back with specific instructions on minimum standards for Social Equity Agreements.

Final Timeline for Phase 3

The Rules Committee instructed DCR to create a final timeline for Phase 3 and post the information on their website. The current information we have on timing is outlined here.

Parameters for Sale of Phase 3 Business

The Rules Committee instructed DCR to report back with options for minimum standards that would protect the social equity license holder, additional owners, and investors in the event of a sale.

Stay tuned for further updates over the next few weeks.

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Lauren Estevez is an attorney who advises international, multi-state and California cannabis brands, operators, and investors. She is nationally recognized as a subject matter expert in Cannabis Law and her work has been featured on CNBC, Bloomberg Law, and SXSW. The National Law Journal awarded Lauren the recognition of Cannabis Law Trailblazer in 2019. Lauren is the founder of LME Law.