Southern California Cannabis Licensing Update

CITY OF LOS ANGELES PHASE II APPLICATION UPDATE

Earlier this week, the City committed to making applications available on July 18 and to begin accepting Phase II on August 1. The window to submit will remain open for thirty days.

As a refresher, the City’s Department of Cannabis Regulations is approaching permitting in three phases: Phase I (Proposition M Priority processing); Phase II (not-retailer commercial cannabis activity prior to January 1, 2016 processing); and Phase III (commercial cannabis activity for the general public processing).

Phase I closed earlier this year and the City is finally ready to accept Phase II applications.

Phase II is for existing cannabis cultivators, manufacturers, and distributors who were operating in the City beforeJanuary1,2016 and who were suppliers to EMMDs before 2017.

The timing of Phase III is to be determined at this time, but will follow the completion of applications that are accepted and processed as a part of Phase II. We anticipate that Phase III will open in October of this year.

CITY OF LOS ANGELES SOCIAL EQUITY UPDATE

Earlier this week, the Los Angeles City Council adopted a number of clean-up ordinances pertaining to cannabis permitting in the City.

Most notably, the Council adopted key provisions pertaining to the social equity component.

Formerly, the social equity component required that Tier 3 applicants provide leased space, business, or licensing and compliance assistance for a period of three years to their social equity partners. As revised, Tier 3 applicants may now be able to provide payments to social equity partners in lieu of providing access to property on site.

While the amount of the in lieu payment has not been determined yet, it does provide operators with more flexibility in their social equity arrangements, freeing up the industry for additional innovation, while complying with City requirements.

While the City has made significant strides towards ironing out the details, the social equity component for Phase II applicants will not likely be ready prior to the opening of Phase II applications (discussed above).

STATE EMERGENCY REGULATIONS

Earlier this month, the California Bureau of Cannabis Control released its new emergency regulations. Notable changes include:

Requiring that all cannabis and cannabis products be tested. As of July 1, 2018, all cannabis and cannabis products must be tested prior to sale. Retailers must either have their current inventory tested or must otherwise purge their inventory of untested cannabis and cannabis products. Striking the prohibition that retailers cannot display cannabis goods in a place visible from outside the licensed premises. Requiring cannabis delivery drivers to maintain a log of all stops and associated travel times.

PASADENA CANNABIS UPDATE

Pasadena voters recently decided to lift the City’s ban on commercial cannabis activity.

Measure CC will authorize a small number of commercial cannabis businesses to operate within Pasadena, which includes six retail locations, four cultivation sites and four testing laboratories.

Additionally, voters decided to tax marijuana retail locations at 6% and 4% for other marijuana-related businesses. The tax revenue will be used for general City operations as well as costs associated with enforcement actions.

The cannabis dispensaries currently operating within Pasadena will be closed down and will not be considered for the six retail permits that Measure CC will authorize.

CULVER CITY CANNABIS UPDATE

Culver city is finally set to accept the long-awaited applications to marijuana dispensaries. They will select three retail locations based on an extensive merit-based application. It is anticipated that the selection process will be highly competitive. The Culver City application period is expected to open July 23rd and be open for 60 days. Puzzle group has a track record of winning such merit-based applications.

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