LA Phase 3 - Draft Ordinances Released 4/12/2019

LA Phase 3 Cannabis Retail - Draft Ordinances Released 4/12/2019

On April 12th, the City of Los Angeles released the Draft Ordinances that will govern new Commercial Cannabis Retail activities in the City and the rollout of Phase 3 retail cannabis licensing for Los Angeles. The City Attorney presented the draft ordinances and now City Council will read, consider, and eventually vote on a Final Ordinance. Further changes are likely, but the publication of the Draft Ordinances means we are one step closer to Phase 3.

For the most updated Guide to Phase 3 (July 2019) click below:

Here is a summary of the key highlights from the Draft Ordinances:

First come, first served

The current draft ordinance presents a first come, first served licensing program whereby the applicant with the first application will take priority over subsequent ones, and the first 100 qualifying applicants will receive the first 100 licenses. This is going to be a hotly debated issue in upcoming City Council meetings.

200 Retail Licenses for Social Equity Applicants in 2 Rounds

Social Equity Applicants will be able to apply for the first 200 retail licenses available in LA. There will be 2 rounds of applications within Phase 3. The first round will issue 100 retail licenses, giving preference to Tier 1 social equity applicants (with the goal of having at least 75 Tier 1 social equity applicants in this round), and the remainder of those licenses (about 25) will go to Tier 2 applicants. Then, a second Round of licensing will take place with 100 retail licenses given to Tier 1 and Tier 2 social equity applicants. For a summary of the Social Equity qualifications read my previous post here.

LA Phase 3 cannabis overview

LA Phase 3 cannabis overview

LA Phase 3 timeline under the Proposed Ordinance

LA Phase 3 timeline under the Proposed Ordinance

Delivery Pilot Program - 60 Licenses

A delivery pilot program will issue licenses to 40 social equity applicants and 20 general applicants for a total of 60 delivery licenses.

Maximum of 3 Retail Licenses

Owners will be able to have a 20% or more equity stake in a maximum of three retail or delivery licenses in the City of LA.

Management Company Definition

The Definition of “Management Company” has been amended and the previous restriction that a management company cannot hold an equity stake in the Licensee has been removed.

Undue Concentration Limits Still Apply, with Exceptions

Undue Concentration limits will still apply for new retail but do not apply to Phase 1 EMMDs or Phase 2 non-retailer microbusinesses or other operators (those licensed under SEC. 104.08). For more on undue concentration, check out the DCR’s newly published data here.

No Amendments During the Application Process

After submitting a Phase 3 application, an Applicant is not permitted to remove or replace the individual owner who is a Tier 1 or Tier 2 Social Equity Applicant, or change the location of its Business Premises during the Application Process.

Stay tuned for further updates.

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.