LA Phase 3 Cannabis - Breaking News - City Council votes Ordinances into Law

LA Cannabis Phase 3 to Begin Summer 2019 - City Council votes Ordinances into Law

On April 30th, the City Council unanimously voted two Ordinances governing L.A.’s Phase 3 retail cannabis rollout into law. The new ordinances represent significant changes from the previous versions, which are covered in previous posts. Stay tuned for further updates as news develops on Phase 3 today.

First, on timing, Councilmember Wesson introduced a Motion that instructs the DCR to begin the pre-vetting social equity phase no later than Tues., May 28th, 2019, and to begin the application window for Phase 3 - Round 1, no later than Tues., Sept. 3rd, 2019. This motion was passed into law, along with the Ordinances today.

la-phase-3-cannabis-to-begin-summer-2019

The Phase 3 procedures ordinance presents at least three pathways to licensure in Phase 3: a first, Round 1, which will issue 100 storefront retail licenses; a second, Round 2, which will issue 150 (and possibly more) retail storefront licenses; and a third, called the Delivery Pilot Program, which will issue 60 new delivery licenses. Note that Phase 2 applicants will also be able to add delivery to their annual license applications, which is separate from the aforementioned rounds. The first-in-time rule remains in the procedures ordinance, meaning that the first application to be submitted for retail storefront which is complete will prevail over subsequent applications within 700 feet, or in the case of the delivery pilot, subsequent applications after the initial 60 (there is no distancing requirement between delivery businesses). For background on qualifying for the social equity program, including qualifying zip codes, read my previous post here. For Undue Concentration limits by neighborhood in LA read more here and access our graphic organized from most available to least available neighborhoods here.

Social Equity Pre-Vetting - 60 days

Social Equity applicants will be able to apply directly to the DCR to check their eligibility for the Social Equity program during a 60 day period.

LA Phase 3 Cannabis - Social Equity Criteria

LA Phase 3 Cannabis - Social Equity Criteria

Technical Assistance Required 45 days before Phase 3 Licensing Opens

Technical assistance must be available via DCR for at least 45 days before Phase 3 licensing opens.  

Round 1 - 100 Retail Cannabis Licenses

Only Tier 1 and Tier 2 social equity applicants will be able to apply in Round 1, a property is required, and the Department will aim to have 75 of the licenses issued in this round go to Tier 1 Social Equity Applicants. The limit for Social Equity partners to only apply with one Applicant in Phase 3 - Round 1 remains. Round one licenses will be given out first-in-time and the applications will be open for a 14 day window. The Certificate of Occupancy requirement has been removed.

LA Phase 3 Cannabis Round 1 and 2

LA Phase 3 Cannabis Round 1 and 2

Round 2 - 150+ Retail Cannabis Licenses

Phase 3 - Round 2 will be open for a period of 30 calendar days and licenses will be issued first-in-time. The ordinance contains an error and is missing one of the requirements, which may be business entity information. Once the thirty day window comes to an end, Applicants will then have 90 days to provide additional documentation to DCR including a lease for a compliant property. The Certificate of Occupancy requirement has been removed.

Delivery Pilot - Type 9 Cannabis Delivery licenses

Phase 3 will also contain a Delivery Pilot Program, which will issue 60 licenses. 40 will go to Social Equity Tier 1 or 2s, while 20 will go to General Applicants. No specifics are provided yet on timing for the delivery window and the time period for submitting applications.

LA Phase 3 cannabis delivery pilot program

LA Phase 3 cannabis delivery pilot program

Other Delivery

Phase 2 Licensees will be able to add delivery to their current premises at the time of applying for annual licenses from the City of LA. This is separate from the Delivery Pilot Program.

Transfer Restrictions

Transfers will be prohibited of equity shares in a Tier 1 or 2 social equity business until the DCR adopts minimum standards for such transfers.

Delivery within City Limits, Unless Authorized by DCR

Delivery will only be allowed within the City Limits, unless a licensee has approval from DCR to deliver outside the City. This is contained in the second Ordinance which passed today and no further details have been provided on how one would get authorization to deliver to other cities within CA, as allowed by State Law.

Stay tuned for further updates on Phase 3.

Lauren Estevez

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.