Manzuri Law: City of Los Angeles Implements Sweeping Changes to Cannabis Licensing in Unanimous Council Vote, Here are Four Key Amendments to Lookout For

Recently, theLos Angeles City Councilpassed an ordinance into law that brings sweeping changes to the City’s commercial cannabis industry. The ordinance, passed by unanimous vote on May 23, 2023 and signed intoLAMCby Mayor Bass on May 26, 2023, has several game-changing implications for licensed cannabis operators and prospective applicants seeking licensure in the City of Los Angeles. Below we’ve outlined four of the amendments, but there are many more.Contact one of our experienced California cannabis attorneys or licensing staff to evaluate how your license or application could be impacted.

Licensed Operators May Now Relocate Their Business Premises to Another Community Plan Area

For many operators, the changes bring new hope. Licensees authorized to conduct commercial cannabis activities for cultivation (Types 1A, 1C, 2A, 3A, 5A), volatile manufacturing (Type 7), and storefront retail or microbusiness with on-site sales (Types 10 or 12) may now relocate to a new Community Plan Area, provided that the new Community Plan Area has not met undue concentration. Previously, those licensees who wished to relocate were limited to locations within their existing Community Plan Area. The loosened restrictions create much more flexibility for licensees wishing to relocate their business premises to another area of Los Angeles. It is currently unclear which areas have met undue concentration for all license types, but the DCR is slated to release a map with this information within the next month.

Temporary Approval to Be Replaced with New Annual Licensing Process Implemented By DCR

The recently adopted legislation drastically restructures the licensing process in the City of Los Angeles. Currently, applicants can apply for “Temporary Approval,” which effectively allows them to operate without meeting full annual licensing requirements (so long as they have a corresponding state license). However, with this new legislation, the DCR will no longer accept applications for Temporary Approval after June 30, 2023 for non-SEIA applicants or after July 31, 2023 forSEIA applicants. Thereafter, Applicants must apply directly for an Annual License. Licensees currently operating under Temporary Approval and those who receive Temporary Approval prior to the sunset dates will be eligible to continue operating under Temporary Approval andrenew their license annually until February 18, 2027. Thereafter, Temporary Approval will no longer be valid and those businesses must obtain an Annual License to operate.

The adopted ordinance also lays the framework for the Annual Licensing process. Notably, the Annual Licensure process takes longer and is more involved than the Temporary Approval process, but the core components of each licensing pipeline are similar. Applicants seeking an Annual License will need to complete and submit all information, forms, and documents required byDCR’s Rules and Regulations. A project description and compliance with theCalifornia Environmental Quality Act (CEQA), are also required. Within 30 days of submitting a complete application and paying the application fee, Applicants will receive a Notice of Complete Application by DCR.

Applicants with a pending Temporary Approval license or licensees currently operating under Temporary Approval whose application/license is deemed abandoned or expired, respectively after June 20, 2023 will be required to refile under anAnnual License application. Fortunately, the new regulations allow applicants three (3) years after the date the application/license is marked abandoned/expired to initiate refiling. This will allow applicants more time to refile an application, as the previous regulations only allowed for a one (1) year refiling window.

Novel Operating Permit Now Required in Addition to Annual License

Pursuant to theupdated LAMC, applicants seeking an Annual License must receive both the license and an “Operating Permit,” introduced and defined in the recently adopted ordinance, prior to operating any commercial cannabis activities under the Annual License. The Operating Permit is not currently required to operate under a Temporary Approval license. Applicants who wish to operate under an Annual License must complete various authorizations to qualify for an Operating Permit, including a Certificate of Occupancy, which may require clearance from theLos Angeles Fire Department andDepartment of Water and Power, aLos Angeles County Department of Public Health permit, and a corresponding state license. A final inspection of the business premises must be conducted before an Operating Permit is issued. DCR will not issue Operating Permits to any business premises with an active Notice of Violation or Notice to Comply. If the applicant is a storefront retailer or microbusiness with on-site sales, it will need to obtain an Emblem Placard from theCounty of Los Angeles prior to obtaining an Operating Permit.

P3RR1 Retail Applicants Deemed Ineligible to Sensitive Uses Can Apply Under New Location

The first 200 eligible Phase 3 Retail Round 1 applicants who were deemed ineligible due to (1) a Community Plan Area having reached undue concentration on or after September 3, 2019, (2) the failure to submit proof of deposit, or (3) due to proximity to a sensitive use, are now eligible for further processing under the recently adopted ordinance. This is great news for any SEIAs who were included in the top 200 applicants but were then deemed ineligible. Under the revised regulations, these applicants will now be eligible for further processing subject to relocating the business premises.

Our experienced attorneys have successfully represented clients in the City of Los Angeles in cannabis licensing since the day applications were first opened. We have helped hundreds of applicants and operators procure and/or maintain their local and state licenses and work closely with the DCR in order to stay up-to-date on the ever-changing regulations.Contact a member of our team today if you are a current or prospective applicant or licensee who needs assistance with Los Angeles licensing.