DEPARTMENT​ ​OF​ ​CANNABIS​ ​REGULATION​ ​MEMORANDUM​ ​ON

POLICY​ ​DEVELOPMENT,​ ​IMPLEMENTATION​ ​AND​ ​CANNABIS

BUSINESS​ ​LICENSING

FROM: CAT​ ​PACKER,​ ​EXECUTIVE​ ​DIRECTOR,​ ​DEPARTMENT​ ​OF​ ​CANNABIS

REGULATION
DATE: December​ ​5,​ ​2017
RE: POLICY​ ​DEVELOPMENT,​ ​IMPLEMENTATION​ ​AND​ ​CANNABIS
BUSINESS​ ​LICENSING

BACKGROUND
Over​ ​the​ ​course​ ​of​ ​the​ ​last​ ​20​ ​years,​ ​California​ ​has​ ​experienced​ ​a​ ​significant​ ​shift​ ​in
public​ ​opinion,​ ​and​ ​consequently​ ​public​ ​policy,​ ​surrounding​ ​cannabis.​ ​The​ ​passage​ ​of
Proposition​ ​215​ ​in​ ​1996​ ​made​ ​California​ ​the​ ​first​ ​state​ ​in​ ​the​ ​Country​ ​to​ ​decriminalize
cannabis​ ​for​ ​medical​ ​use.​ ​Almost​ ​20​ ​years​ ​later,​ ​after​ ​leaving​ ​much,​ ​if​ ​not​ ​all,​ ​regulation
to​ ​local​ ​jurisdictions,​ ​the​ ​California​ ​legislature,​ ​in​ ​2015,​ ​ ​passed​ ​three​ ​separate​ ​bills,
collectively​ ​known​ ​as​ ​the​ ​Medical​ ​Marijuana​ ​Regulation​ ​and​ ​Safety​ ​act​ ​to​ ​establish​ ​a
comprehensive​ ​state​ ​licensing​ ​and​ ​regulatory​ ​system​ ​for​ ​the​ ​commercial​ ​cultivation,
manufacture,​ ​sale,​ ​transport,​ ​distribution,​ ​delivery,​ ​and​ ​testing​ ​of​ ​medical​ ​cannabis.​ ​The
statewide​ ​passage​ ​of​ ​the​ ​Adult-Use​ ​of​ ​Marijuana​ ​Act​ ​(AUMA),​ ​also​ ​known​ ​as
Proposition​ ​64,​ ​in​ ​November,​ ​2016​ ​ ​largely​ ​decriminalized​ ​cannabis,​ ​allowing​ ​adults​ ​21
years​ ​of​ ​age​ ​or​ ​older​ ​to​ ​legally​ ​grow,​ ​possess,​ ​and​ ​use​ ​cannabis​ ​for​ ​nonmedical
purposes,​ ​with​ ​certain​ ​restrictions.

Personal​ ​Adult-Use
● Proposition​ ​64​ ​authorizes​ ​a​ ​person​ ​21​ ​years​ ​of​ ​age​ ​or​ ​older​ ​to​ ​possess
and​ ​use​ ​up​ ​to​ ​28.5​ ​grams​ ​of​ ​cannabis​ ​and​ ​up​ ​to​ ​8​ ​grams​ ​of​ ​concentrated
cannabis,​ ​and​ ​to​ ​possess​ ​up​ ​to​ ​6​ ​living​ ​cannabis​ ​plants​ ​and​ ​the​ ​cannabis
produced​ ​by​ ​those​ ​plants,​ ​subject​ ​to​ ​certain​ ​restrictions.
● Manufacturing​ ​concentrated​ ​cannabis​ ​using​ ​a​ ​volatile​ ​solvent,​ ​defined​ ​as
volatile​ ​organic​ ​compounds​ ​and​ ​dangerous​ ​poisons,​ ​toxins,​ ​or
carcinogens,​ ​unless​ ​done​ ​in​ ​accordance​ ​with​ ​a​ ​state​ ​license​ ​is​ ​a​ ​crime.

In​ ​order​ ​to​ ​efficiently​ ​implement​ ​the​ ​will​ ​of​ ​the​ ​voters,​ ​California​ ​law,​ ​namely​ ​Senate​ ​Bill
94,​ ​has​ ​recently​ ​merged​ ​medical​ ​cannabis​ ​regulations​ ​and​ ​Adult-Use​ ​cannabis
regulations​ ​into​ ​a​ ​single​ ​regulatory​ ​framework​ ​known​ ​as​ ​the​ ​Medicinal​ ​and​ ​Adult-Use
Cannabis​ ​Regulation​ ​&​ ​Safety​ ​Act​ ​(MAUCRSA).

Under​ ​MAUCRSA,​ ​the​ ​state​ ​will​ ​soon​ ​begin​ ​issuing​ ​temporary​ ​licenses​ ​that​ ​become
effective​ ​Jan.​ ​1,​ ​2018.​ ​In​ ​order​ ​to​ ​qualify​ ​for​ ​a​ ​state​ ​temporary​ ​license,​ ​business
applicants​ ​must​ ​first​ ​receive​ ​approval​ ​from​ ​their​ ​local​ ​jurisdiction.
COMMERCIAL​ ​CANNABIS​ ​ACTIVITY​ ​LICENSING​ ​IN​ ​THE​ ​CITY​ ​OF​ ​LOS​ ​ANGELES
In​ ​March​ ​of​ ​2017,​ ​Los​ ​Angeles​ ​voters​ ​overwhelming​ ​supported​ ​the​ ​passage​ ​of​ ​Measure
M​ ​which​ ​requires​ ​the​ ​City​ ​Council​ ​to​ ​repeal​ ​and​ ​replace​ ​the​ ​City’s​ ​current​ ​restrictions​ ​on
medical​ ​cannabis​ ​operations​ ​with​ ​a​ ​comprehensive​ ​regulatory​ ​and​ ​licensing​ ​system​ ​and
a​ ​new​ ​taxation​ ​scheme​ ​for​ ​commercial​ ​cannabis​ ​activity.

Commercial​ ​Cannabis​ ​Activity​ ​Taxation

○ Adult-Use​ ​Sales​ ​--​ ​10%​ ​of​ ​gross​ ​receipts
○ Medical​ ​Sales​ ​ ​--​ ​ ​5%​ ​of​ ​gross​ ​receipts
○ Manufacturing,​ ​Cultivation​ ​and​ ​Other​ ​Activity​ ​--​ ​2%​ ​of​ ​gross​ ​receipts
○ Testing,​ ​Research,​ ​Transportation​ ​--​ ​1%​ ​of​ ​gross​ ​receipts

Under​ ​Measure​ ​M,​ ​the​ ​City​ ​Council​ ​has​ ​been​ ​given​ ​full​ ​authority​ ​to​ ​regulate​ ​all​ ​aspects
of​ ​cannabis-related​ ​activity.​ ​To​ ​implement​ ​cannabis​ ​regulations​ ​within​ ​the​ ​City​ ​of​ ​Los
Angeles,​ ​the​ ​City​ ​has​ ​established​ ​a​ ​Department​ ​of​ ​Cannabis​ ​Regulation​ ​(DCR)​ ​and​ ​a
Cannabis​ ​Regulation​ ​Commission.

DCR​ ​is​ ​generally​ ​responsible​ ​for​ ​administering​ ​the​ ​Rules​ ​and​ ​Regulations​ ​adopted​ ​by
the​ ​City​ ​Council.​ ​Specifically,​ ​DCR​ ​will​ ​administer​ ​the​ ​application​ ​process​ ​in​ ​conjunction
with​ ​the​ ​Cannabis​ ​Regulation​ ​Commission,​ ​make​ ​determinations​ ​related​ ​to​ ​non-retail
cannabis​ ​licensing,​ ​administer​ ​and​ ​coordinate​ ​audit​ ​and​ ​inspection​ ​processes​ ​for
cannabis-related​ ​businesses​ ​and​ ​enforce​ ​regulatory​ ​compliance​ ​of​ ​licensed​ ​businesses
engaged​ ​in​ ​commercial​ ​cannabis​ ​activity.

The​ ​Cannabis​ ​Regulation​ ​Commission​ ​will​ ​hold​ ​hearings​ ​related​ ​to​ ​issuing​ ​licenses​ ​for
retail​ ​and​ ​certain​ ​non-retail​ ​Commercial​ ​Cannabis​ ​Activity.

Both​ ​the​ ​DCR​ ​and​ ​the​ ​Cannabis​ ​Regulation​ ​Commission​ ​may​ ​recommend​ ​amendments
to​ ​the​ ​Rules​ ​and​ ​Regulations​ ​to​ ​the​ ​City​ ​Council.

Soon​ ​to​ ​be​ ​adopted​ ​ordinances​ ​pertaining​ ​to​ ​Cannabis​ ​Procedures,​ ​Rules​ ​and
Regulations​ ​for​ ​Cannabis​ ​Procedures​ ​and​ ​Location​ ​Restrictions​ ​will​ ​provide​ ​detailed
information​ ​on​ ​the​ ​various​ ​aspects​ ​of​ ​cannabis​ ​business​ ​licensing.

GENERAL​ ​LICENSING​ ​INFORMATION

DCR​ ​ ​will​ ​provide​ ​licensing​ ​for​ ​the​ ​following​ ​commercial​ ​cannabis​ ​activities:​ ​Cultivation,
Manufacturing,​ ​Distribution,​ ​Testing,​ ​Retail,​ ​Delivery​ ​and​ ​Microbusiness
● Businesses​ ​licensed​ ​to​ ​engage​ ​in​ ​commercial​ ​cannabis​ ​activity​ ​are​ ​only
allowed​ ​to​ ​conduct​ ​business​ ​transactions​ ​with​ ​other​ ​licensed​ ​businesses
● Licensees​ ​must​ ​hold​ ​an​ ​Adult-Use​ ​designated​ ​license​ ​in​ ​order​ ​to​ ​engage
in​ ​ ​Adult-Use​ ​commercial​ ​cannabis​ ​activity​ ​and​ ​a​ ​Medical​ ​designated
license​ ​in​ ​order​ ​to​ ​engage​ ​in​ ​medical​ ​commercial​ ​cannabis​ ​activity;​ ​there
is​ ​an​ ​exemption​ ​for​ ​Testing​ ​Licensees​ ​who​ ​do​ ​not​ ​require​ ​a​ ​designation
● The​ ​owner​ ​or​ ​employee​ ​of​ ​a​ ​Testing​ ​License​ ​may​ ​not​ ​own​ ​any​ ​interest​ ​in,
nor​ ​be​ ​employed​ ​by,​ ​any​ ​other​ ​category​ ​of​ ​licensing.
 ● Within​ ​the​ ​City​ ​of​ ​Los​ ​Angeles,​ ​Outdoor​ ​Cultivation​ ​is​ ​prohibited;
“Mixed-Light​ ​Cultivation”​ ​is​ ​being​ ​considered​ ​but​ ​is​ ​not​ ​a​ ​part​ ​of​ ​the
currently​ ​ ​proposed​ ​ordinances.

Licensing​ ​will​ ​begin​ ​at​ ​the​ ​discretion​ ​of​ ​DCR.​ ​ ​DCR​ ​will​ ​generally​ ​process​ ​applications​ ​in
3​ ​phases,​ ​with​ ​the​ ​exception​ ​that​ ​applications​ ​for​ ​ ​testing​ ​licenses​ ​will​ ​receive
continuous​ ​priority:

1. “Prop​ ​M​ ​Priority​ ​Processing”​ ​(Businesses​ ​currently​ ​authorized​ ​by​ ​the​ ​City)
○ 60-Day​ ​Application​ ​Window​ ​mandated​ ​by​ ​Measure​ ​M
○ DCR​ ​expects​ ​to​ ​begin​ ​processing​ ​applications​ ​for​ ​provisional​ ​licensing
prior​ ​to​ ​Jan.​ ​1.​ ​2018
2. Businesses​ ​engaged​ ​in​ ​“Non-Retail​ ​Commercial​ ​Cannabis​ ​Activity​ ​Prior​ ​to
January​ ​1,​ ​2016”
○ This​ ​processing​ ​window​ ​will​ ​close​ ​effective​ ​April​ ​1,​ ​2018
3. Social​ ​Equity​ ​Program​ ​and​ ​General​ ​Licensing
○ DCR​ ​is​ ​likely​ ​to​ ​begin​ ​processing​ ​theses​ ​applications​ ​after​ ​April​ ​1,​ ​2018

DCR​ ​will​ ​coordinate​ ​with​ ​state​ ​licensing​ ​and​ ​regulatory​ ​authorities​ ​to​ ​grant​ ​businesses
the​ ​local​ ​approval​ ​necessary​ ​for​ ​their​ ​state​ ​temporary​ ​ ​and​ ​annual​ ​licensing.​ ​Generally
businesses​ ​must:
● Submit​ ​their​ ​complete​ ​application​ ​online
● Pay​ ​any​ ​fees​ ​and/or​ ​outstanding​ ​tax​ ​obligations
● Complete​ ​Live​ ​Scan
● Provide​ ​Notice​ ​to​ ​Local​ ​Neighborhood​ ​Council
● Pass​ ​Inspections​ ​conducted​ ​by:
○ DCR
○ LAPD
○ LAFD
○ Department​ ​of​ ​Building​ ​and​ ​Safety

DCR​ ​will​ ​conduct​ ​inspections,​ ​investigations​ ​and​ ​audits​ ​to​ ​determine​ ​and​ ​monitor
compliance​ ​with​ ​the​ ​City’s​ ​Rules​ ​and​ ​Regulations
General​ ​Cannabis​ ​Business​ ​Operational​ ​Requirements​ ​include:
○ Responsible​ ​Management​ ​of​ ​Business​ ​Premises
○ 24/7​ ​Neighborhood​ ​Liaison​ ​to​ ​Address​ ​Complaints
○ Prominently​ ​Display​ ​Business​ ​License​ ​and​ ​other​ ​required​ ​signage
○ Prohibition​ ​of​ ​onsite​ ​cannabis,​ ​alcohol​ ​and​ ​tobacco​ ​consumption
○ Prohibition​ ​of​ ​onsite​ ​alcohol​ ​and​ ​tobacco​ ​sales
○ Retail​ ​Operators​ ​must​ ​closed​ ​by​ ​10​ ​PM

The​ ​City​ ​Attorney​ ​and​ ​LAPD​ ​will​ ​be​ ​responsible​ ​for​ ​Criminal​ ​Enforcement​ ​and
responding​ ​to​ ​any​ ​criminal​ ​related​ ​activity,​ ​including​ ​unlicensed​ ​businesses.
CANNABIS​ ​BUSINESSES​ ​LOCATION​ ​RESTRICTIONS
Businesses​ ​engaged​ ​in​ ​Commercial​ ​Cannabis​ ​Activity​ ​are​ ​restricted​ ​to​ ​specified​ ​zones
and​ ​must​ ​observe​ ​specified​ ​distances​ ​from​ ​sensitive​ ​uses.

The​ ​proposed​ ​ordinance​ ​allows​ ​specified​ ​types​ ​of​ ​commercial​ ​cannabis​ ​activity​ ​to
legally​ ​operate​ ​in​ ​the​ ​City.​ ​The​ ​types​ ​of​ ​commercial​ ​cannabis​ ​activity​ ​and​ ​zones​ ​where
commercial​ ​cannabis​ ​activity​ ​may​ ​operate​ ​are​ ​summarized​ ​as​ ​follows:
● Retail​ ​activity​ ​(Storefront​ ​and​ ​Non-storefront)​ ​is​ ​allowed​ ​primarily​ ​in​ ​commercial
and​ ​industrial​ ​zones:​ ​C1,​ ​C1.5,​ ​C2.​ ​C4,​ ​C5,​ ​CM,​ ​M1,​ ​M2,​ ​and​ ​M3.
● Microbusiness​ ​activity​ ​with​ ​on-site​ ​retail​ ​sales​ ​is​ ​allowed​ ​primarily​ ​in​ ​industrial
zones:​ ​M1,​ ​M2,​ ​and​ ​M3.​ ​Microbusiness​ ​activity​ ​with​ ​no​ ​on-site​ ​retail​ ​sales​ ​is
allowed​ ​also​ ​to​ ​locate​ ​in​ ​the​ ​MR1​ ​and​ ​MR2​ ​Zones.
● Indoor​ ​cultivation​ ​and​ ​“Level​ ​1”​ ​manufacturing​ ​activity​ ​is​ ​allowed​ ​primarily​ ​in
industrial​ ​zones:​ ​MR1,​ ​M1,​ ​MR2,​ ​M2,​ ​and​ ​M3.
● Outdoor​ ​and​ ​mixed​ ​light​ ​(i.e.​ ​greenhouses)​ ​cultivation​ ​are​ ​not​ ​allowed​ ​in​ ​any
zone.
● “Level​ ​2”​ ​manufacturing​ ​activity​ ​is​ ​allowed​ ​primarily​ ​in​ ​industrial​ ​zones:​ ​MR2,​ ​M2,
and​ ​M3.
● Distribution​ ​activity​ ​is​ ​allowed​ ​primarily​ ​in​ ​industrial​ ​zones:​ ​MR1,​ ​M1,​ ​MR2,​ ​M2,
and​ ​M3.
● Testing​ ​activity​ ​is​ ​allowed​ ​primarily​ ​in​ ​industrial​ ​zones:​ ​CM,​ ​MR1,​ ​M1,​ ​MR2,​ ​M2,
and​ ​M3.

The​ ​ ​proposed​ ​ordinance​ ​includes​ ​the​ ​following​ ​specified​ ​distancing​ ​requirements​ ​for
commercial​ ​cannabis​ ​activity:
● ​ ​Non-retail​ ​activity​ ​(includes​ ​cultivation,​ ​manufacturing​ ​(Level​ ​1​ ​&​ ​Level​ ​2),
testing,​ ​distribution,​ ​microbusiness​ ​with​ ​delivery-only​ ​retail​ ​or​ ​without​ ​retail,​ ​and
delivery-only​ ​retail):​ ​600​ ​feet​ ​from​ ​schools​ ​and​ ​day​ ​care​ ​centers.
● Manufacturing​ ​(Level​ ​2,​ ​use​ ​of​ ​volatile​ ​solvents):​ ​200​ ​feet​ ​from​ ​residential​ ​zones.
● Retail​ ​and​ ​microbusiness​ ​activity​ ​with​ ​on-site​ ​sales:​ ​700​ ​feet​ ​from​ ​schools,​ ​day
care​ ​centers,​ ​alcoholism/drug​ ​rehabilitation​ ​or​ ​treatment​ ​facilities,​ ​permanent
supportive​ ​housing,​ ​public​ ​libraries,​ ​public​ ​parks,​ ​and​ ​other​ ​cannabis​ ​retail​ ​and
microbusiness​ ​activity​ ​with​ ​on-site​ ​sales.

DCR​ ​will​ ​not​ ​issue​ ​a​ ​license​ ​associated​ ​with​ ​a​ ​premise​ ​located​ ​in​ ​a​ ​geographical​ ​area​ ​of
“Undue​ ​Concentration”​ ​unless​ ​the​ ​City​ ​Council​ ​finds​ ​that​ ​the​ ​approval​ ​of​ ​that​ ​particular
license​ ​application​ ​would​ ​serve​ ​public​ ​convenience​ ​or​ ​necessity.
○ In​ ​order​ ​to​ ​determine​ ​appropriate​ ​thresholds​ ​for​ ​ ​“Undue​ ​Concentration”
specified​ ​ratios​ ​for​ ​maximum​ ​concentrations​ ​of​ ​certain​ ​license​ ​types​ ​have
been​ ​determined​ ​in​ ​each​ ​Community​ ​Plan​ ​Area​ ​based​ ​on​ ​population.

SOCIAL​ ​EQUITY​ ​PROGRAM

The​ ​City​ ​of​ ​Los​ ​Angeles​ ​is​ ​currently​ ​considering​ ​a​ ​Social​ ​Equity​ ​Program​ ​aimed​ ​at
promoting​ ​equitable​ ​ownership​ ​and​ ​employment​ ​opportunities​ ​in​ ​the​ ​cannabis​ ​industry.
This​ ​consideration​ ​was​ ​born,​ ​largely​ ​out​ ​of​ ​a​ ​response​ ​to​ ​community​ ​members
concerned​ ​about​ ​the​ ​harmful​ ​impact​ ​of​ ​past​ ​cannabis​ ​policies​ ​and​ ​their​ ​disproportionate
enforcement​ ​and​ ​the​ ​opportunity​ ​for​ ​future​ ​cannabis​ ​policies​ ​to​ ​attempt​ ​to​ ​acknowledge
and​ ​address​ ​those​ ​harms.

At​ ​the​ ​instruction​ ​of​ ​the​ ​City​ ​Council,​ ​the​ ​Chief​ ​Legislative​ ​Analyst​ ​contracted​ ​with​ ​a
consultant​ ​to​ ​conduct​ ​a​ ​Social​ ​Equity​ ​Analysis​ ​which​ ​included​ ​an​ ​analysis​ ​of​ ​poverty
and​ ​LAPD​ ​statistics,​ ​an​ ​analysis​ ​of​ ​barriers​ ​to​ ​cannabis​ ​business​ ​ownership​ ​and
cannabis​ ​industry​ ​employment​ ​opportunities​ ​and​ ​recommendations​ ​ ​on​ ​policy​ ​and
program​ ​options.​ ​After​ ​months​ ​of​ ​community​ ​and​ ​stakeholder​ ​engagement​ ​and
thoughtful​ ​deliberation​ ​the​ ​following​ ​program​ ​components​ ​are​ ​being​ ​considered:

Tier​ ​1​ ​“Social​ ​Equity​ ​Program​ ​Participant”:

Qualifying​ ​Criteria:​ ​51​ ​Percent​ ​Legal​ ​and​ ​Economic​ ​Business​ ​Ownership​ ​by​ ​a​ ​Person​ ​who​ ​is:
○ Low​ ​Income​ ​&​ ​5​ ​Year​ ​Cumulative​ ​Residency​ ​in​ ​a​ ​Community​ ​Disproportionately
Impacted​ ​by​ ​Cannabis​ ​Enforcement
OR
○ Low​ ​Income​ ​&​ ​Prior​ ​California​ ​Cannabis​ ​Conviction​ ​(that​ ​would​ ​now​ ​be​ ​considered​ ​a
misdemeanor​ ​under​ ​California​ ​law)
Benefits:
○ Business,​ ​Licensing​ ​and​ ​Compliance​ ​Assistance
○ Expedited​ ​Renewal​ ​Processing
○ Program​ ​Site​ ​Specific​ ​Conditions
○ The​ ​Potential​ ​for​ ​Fee​ ​Deferrals​ ​If​ ​the​ ​City​ ​Council​ ​adopts​ ​a​ ​Fee​ ​Deferral​ ​Program
○ Access​ ​to​ ​an​ ​Industry​ ​Investment​ ​Fund​ ​If​ ​Established

Tier​ ​2​ ​“Social​ ​Equity​ ​Program​ ​Participant”

Qualifying​ ​Criteria:​ ​33​ ​⅓​ ​Percent​ ​Legal​ ​and​ ​Economic​ ​Business​ ​Ownership​ ​by​ ​a​ ​Person​ ​who​ ​is:
○ Low​ ​Income​ ​&​ ​5​ ​Year​ ​Cumulative​ ​Residency​ ​in​ ​a​ ​Community​ ​Disproportionately
Impacted​ ​by​ ​Cannabis​ ​Enforcement
OR
○ 10​ ​Year​ ​Cumulative​ ​Residency​ ​in​ ​a​ ​Community​ ​Disproportionately​ ​Impacted​ ​by​ ​Cannabis
Enforcement
○ A​ ​business​ ​applicant​ ​seeking​ ​Tier​ ​2​ ​status​ ​must​ ​also​ ​enter​ ​into​ ​a​ ​Social​ ​Equity
Agreement​ ​with​ ​the​ ​City​ ​to​ ​provide​ ​capital,​ ​lease​ ​space,​ ​business,​ ​licensing​ ​and
compliance​ ​assistance​ ​to​ ​Persons​ ​who​ ​meet​ ​the​ ​criteria​ ​to​ ​be​ ​a​ ​Tier​ ​1​ ​applicant
Benefits:
○ Business,​ ​Licensing​ ​and​ ​Compliance​ ​Assistance
○ Expedited​ ​Renewal​ ​Processing
○ Program​ ​Site​ ​Specific​ ​Conditions

Tier​ ​3​ ​“Social​ ​Equity​ ​Program​ ​Partner”

Qualifying​ ​Criteria:
○ A​ ​business​ ​applicant​ ​seeking​ ​Tier​ ​3​ ​status​ ​shall​ ​enter​ ​into​ ​a​ ​Social​ ​Equity​ ​Agreement​ ​with
the​ ​City​ ​to​ ​provide​ ​capital,​ ​lease​ ​space,​ ​business,​ ​licensing​ ​and​ ​compliance​ ​assistance​ ​to
Persons​ ​who​ ​meet​ ​the​ ​criteria​ ​to​ ​be​ ​a​ ​Tier​ ​1​ ​or​ ​Tier​ ​2​ ​Social​ ​Equity​ ​Program​ ​Participant.
​ ​Benefits:
○ Expedited​ ​Renewal​ ​Processing
○ Program​ ​Site​ ​Specific​ ​Conditions

Tier​ ​1​ ​Social​ ​Equity​ ​Program​ ​Participants​ ​shall​ ​receive​ ​priority​ ​processing​ ​for​ ​Retail
Commercial​ ​Cannabis​ ​Activity​ ​Licenses​ ​and​ ​for​ ​Microbusiness​ ​Commercial​ ​Cannabis
Activity​ ​Licenses​ ​that​ ​include​ ​retail​ ​on​ ​a​ ​2:1​ ​ration​ ​with​ ​all​ ​non-Social​ ​Equity
applicants.Tiers​ ​1​ ​through​ ​3​ ​Social​ ​Equity​ ​Program​ ​Participants​ ​and​ ​Partners​ ​shall
receive​ ​priority​ ​processing​ ​for​ ​all​ ​non-retail​ ​License​ ​types​ ​on​ ​a​ ​1:1​ ​ratio​ ​with​ ​all
non-Social​ ​Equity​ ​Applicants.

Tier​ ​1,​ ​2​ ​and​ ​3​ ​shall​ ​have​ ​no​ ​less​ ​than​ ​50​ ​percent​ ​of​ ​the​ ​weekly​ ​hours​ ​of​ ​their​ ​respective
workforce​ ​performed​ ​by​ ​employees​ ​whose​ ​primary​ ​place​ ​of​ ​residence​ ​is​ ​within​ ​a​ ​five
mile​ ​radius​ ​of​ ​the​ ​Business​ ​Premises.​ ​Of​ ​those​ ​employees,​ ​20​ ​percent​ ​shall​ ​be​ ​Social
Equity​ ​Workers​ ​and​ ​10​ ​percent​ ​shall​ ​be​ ​Transitional​ ​Workers.
● Tier​ ​2​ ​Social​ ​Equity​ ​Program​ ​Participant’s​ ​have​ ​a​ ​30​ ​percent​ ​Social​ ​Equity​ ​Hire
requirement
● Transitional​ ​Worker​ ​is​ ​defined​ ​in​ ​Section​ ​104.12​ ​(m)​ ​of​ ​the​ ​Rules​ ​and
Regulations.
● Social​ ​Equity​ ​Worker​ ​is​ ​defined​ ​as​ ​a​ ​person​ ​who​ ​is​ ​either:
○ Low​ ​Income​ ​&​ ​5​ ​Year​ ​Cumulative​ ​Residency​ ​in​ ​a​ ​Community
Disproportionately​ ​Impacted​ ​by​ ​Cannabis​ ​Enforcement
OR
○ Low​ ​Income​ ​&​ ​Prior​ ​California​ ​Cannabis​ ​Conviction​ ​(that​ ​would​ ​now​ ​be
considered​ ​a​ ​misdemeanor​ ​or​ ​infraction​ ​under​ ​California​ ​law)

Currently,​ ​Oakland,​ ​San​ ​Francisco​ ​and​ ​Sacramento​ ​have,​ ​or​ ​are​ ​considering
implementing,​ ​Social​ ​Equity​ ​Programs​ ​will​ ​similar​ ​program​ ​criteria​ ​and​ ​benefits.

In​ ​addition​ ​to​ ​employment​ ​and​ ​business​ ​ownership​ ​opportunity,​ ​the​ ​City​ ​of​ ​Los​ ​Angeles
is​ ​considering​ ​and​ ​has​ ​the​ ​opportunity​ ​to​ ​lead​ ​the​ ​nation​ ​in​ ​developing​ ​a​ ​Community
Reinvestment​ ​Program​ ​and​ ​Fund​ ​as​ ​a​ ​part​ ​of​ ​its​ ​Social​ ​Equity​ ​Program.

The​ ​expected​ ​costs​ ​of​ ​the​ ​proposed​ ​Social​ ​Equity​ ​Program​ ​are​ ​unknown​ ​as​ ​previous
cost​ ​analysis​ ​captured​ ​the​ ​costs​ ​of​ ​the​ ​recommendations​ ​contained​ ​in​ ​the​ ​Consultant’s
analysis,​ ​but​ ​not​ ​the​ ​current​ ​program​ ​as​ ​proposed​ ​by​ ​City​ ​Council.

REGULATORY​ ​CHALLENGES​ ​AND​ ​OPPORTUNITIES

The​ ​City​ ​of​ ​Los​ ​Angeles​ ​has​ ​long​ ​been​ ​referred​ ​to​ ​as​ ​one​ ​of​ ​the​ ​largest​ ​cannabis
markets​ ​in​ ​the​ ​world​ ​and​ ​soon​ ​will​ ​become​ ​the​ ​largest​ ​municipality​ ​to​ ​regulate​ ​and
license​ ​commercial​ ​cannabis​ ​activity.

With​ ​initial​ ​policy​ ​development​ ​coming​ ​to​ ​a​ ​close,​ ​DCR​ ​and​ ​the​ ​City​ ​must​ ​quickly​ ​shift​ ​its
attention​ ​towards​ ​responsible​ ​implementation.​ ​The​ ​implementation​ ​of​ ​responsible
regulatory​ ​and​ ​licensing​ ​scheme​ ​will​ ​take​ ​time,​ ​resources,​ ​commitment​ ​and​ ​leadership.

The​ ​new​ ​ordinances​ ​and​ ​their​ ​rules​ ​and​ ​regulations​ ​are​ ​comprehensive,​ ​complex​ ​and
first-in-time,​ ​not​ ​only​ ​for​ ​the​ ​City​ ​but​ ​for​ ​new​ ​business​ ​applicants​ ​who​ ​will​ ​be​ ​subject​ ​to
their​ ​enforcement​ ​and​ ​community​ ​members​ ​who​ ​will​ ​be​ ​dependent​ ​on​ ​their​ ​ability​ ​to
reduce​ ​harms​ ​largely​ ​associated​ ​with​ ​unlicensed​ ​and​ ​unregulated​ ​cannabis​ ​businesses.
It​ ​ ​should​ ​be​ ​expected​ ​that​ ​the​ ​initial​ ​implementation​ ​of​ ​this​ ​regulatory​ ​framework​ ​will​ ​be
an​ ​adaptive​ ​process​ ​with​ ​gradual​ ​steps​ ​toward​ ​responsible,​ ​equitable​ ​regulation.
The​ ​Department​ ​of​ ​Cannabis​ ​Regulation’s​ ​successful​ ​launch​ ​of​ ​implementation​ ​requires
substantial​ ​resources​ ​and​ ​prioritization.​ ​As​ ​the​ ​DCR​ ​budget​ ​and​ ​its​ ​five​ ​allocated
positions,​ ​were​ ​created​ ​prior​ ​to​ ​the​ ​many​ ​responsibilities​ ​detailed​ ​in​ ​the​ ​proposed
ordinances,​ ​DCR​ ​is​ ​currently​ ​grossly​ ​understaffed​ ​and​ ​under-resourced.

DCR’s​ ​many​ ​proposed​ ​responsibilities​ ​include​ ​but​ ​are​ ​not​ ​limited​ ​to:
● Policy​ ​Development
● Community​ ​Engagement​ ​and​ ​Education
● Business​ ​Training
● Business​ ​Licensing​ ​Notice​ ​and​ ​Notification
● Application​ ​Processing,​ ​ ​Review​ ​and​ ​Appeals
● State​ ​Licensing​ ​Verification
● Providing​ ​Administrative​ ​and​ ​Technical​ ​Support​ ​to​ ​the​ ​Cannabis​ ​Regulation
Commission
● Leading​ ​Interdepartmental​ ​Coordination​ ​as​ ​it​ ​related​ ​to​ ​cannabis​ ​licensing​ ​and
enforcement​ ​between​ ​City​ ​Attorney,​ ​CLA,​ ​CAO,​ ​City​ ​Planning,​ ​Building​ ​and
Safety,​ ​LAFD,​ ​ ​and​ ​LAPD
● Business​ ​Inspections
● Managing​ ​and​ ​Responding​ ​to​ ​Resident​ ​Complaints
● Monitoring​ ​and​ ​Enforcing​ ​Compliance

Despite​ ​the​ ​sharp​ ​contrast​ ​between​ ​proposed​ ​responsibilities​ ​and​ ​current​ ​resources,
DCR​ ​continues​ ​to​ ​receive​ ​support​ ​from​ ​various​ ​City​ ​departments​ ​and​ ​is​ ​currently
working​ ​with​ ​the​ ​Mayor’s​ ​Office​ ​and​ ​City​ ​Council​ ​to​ ​appropriately​ ​scale-up​ ​and​ ​prepare
for​ ​timely​ ​implementation.

As​ ​the​ ​City​ ​embarks​ ​on​ ​this​ ​new​ ​era​ ​of​ ​cannabis​ ​policy,​ ​I​ ​look​ ​forward​ ​to​ ​continuing​ ​to
ensure​ ​that​ ​all​ ​Angelenos​ ​are​ ​provided​ ​with​ ​a​ ​responsible,​ ​and​ ​equitable​ ​regulatory
framework​ ​that​ ​strikes​ ​a​ ​balance​ ​between​ ​a​ ​complexity​ ​of​ ​concerns​ ​and​ ​interests,​ ​while
redefining​ ​and​ ​creating​ ​new​ ​standards​ ​for​ ​cannabis​ ​businesses​ ​and​ ​the​ ​interactions
they​ ​have​ ​with​ ​our​ ​many,​ ​diverse​ ​communities.

Sincerely,

Cat​ ​Packer,​ ​J.D.

Executive​ ​Director
Department​ ​of​ ​Cannabis​ ​Regulation