LA Phase 3 Update - March 5, 2019

LA Phase 3 cannabis licensing - March 5, 2019 Update

Update on LA Phase 3 cannabis licensing - 3/5/2019

Update on LA Phase 3 cannabis licensing - 3/5/2019

Today the Los Angeles Rules Committee of the City Council met and made a series of recommendations to the City Attorney to draft an Ordinance reflecting significant changes to Phase 3 for Cannabis Licensing. Here is a summary of the key takeaways*:

  • DCR will pre-vet social equity applicants before Phase 3 opens to ensure they meet City’s criteria

  • This recommendation shows more prioritization of Tier 1 Social Equity (Companies with 51%+ equity ownership) vs prior drafts which treated Tier 1 and Tier 2 similarly.

  • New requirement: Certificate of Occupancy for building (in addition to lease or deed and correct zoning). This means you need to check your CofO and make sure it reflects retail or the intended use of your property, in addition to the zoning.

    • This is a new requirement that was not in place for Phase 1 or Phase 2 applicants.

  • Phase 2 cannabis licensees will be allowed to apply for delivery pilot under this most recent proposal, which is a change from a few weeks ago

  • Phase 1 EMMDs will not be allowed to apply for Phase 3 storefront

  • Social Equity business partners/investors will have ROFR (Right of First Refusal) to buy out social equity applicant after 3 years

  • Type 10 - Retail Storefront:

    • First 75 licenses will go to Tier 1 Social Equity applicants, unless there are not 75 who qualify.

    • 1 application per applicant

    • Second phase will be another 100 licenses for Tier 1 and Tier 2 Social Equity

    • If Phase 3 storefront license applicant does not receive a license due to undue concentration, s/he will receive priority for a Type 9 delivery license

  • Type 9 - Delivery Pilot:

    • 20 of the first 40 social equity licenses will go to Tier 1 Social Equity companies; the second 20 will go to Tier 2 social equity companies; there will still be 20 licenses reserved for general applicants.

    • Only 1 application per applicant

*N.B. City Council will then need to vote on the Ordinance for it to become law so these changes have not yet gone into effect.

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.