August 20, 2019

A lot is moving forward in the LA Cannabis world for all verticals and Phase 3 is dangerously close and it looks like it’s going to be quite the competition.

Phase 3 Procedures and Application Guidelines

In preparation for the highly anticipated Phase 3, the Los Angeles Department of Cannabis Regulation (DCR) is hosting technical assistance workshops to advise and prepare potential applicants. They also published a video and powerpoint slides detailing the process of Social Equity (SE) vetting, requirements for applications and the Phase 3 application process.

After some uncertainty in the industry, DCR Executive Director Cat Packer portrayed confidence, when confirming at the August 6th DCR Workshop that Phase 3 applications would indeed open, as planned, on September 3, 2019, at 10:00 a.m.

As of July 29, 2019, when the Phase 3 Social Equity vetting window closed, there were 1,866 SE applicants that registered for vetting and over 700 verified SE applicants.   DCR is continuing to review and verify SE applicants on a rolling basis and expects that all applicants who submitted verification documents will be informed of their status before the start of Phase 3 Round 1 Licensing on September 3, 2019.

Phase 3 Locations

Location, Location, Location – The one application requirement that seems to be plaguing applicants is securing property and it’s shaping up as the most crucial puzzle piece to Phase 3.  A compliant location is not only crucial but difficult to find, especially in a Community Plan Area (CPA) not already capped by Undue Concentration numbers. By way of background, the DCR is allowed to license 1 storefront retailer for every 10,000 residents in each of the City’s 35 CPA’s.  Once the 1:10,000 ratio is reached in a CPA for Storefront Retail, the CPA is deemed “capped” and the applicant must apply to City Council for a finding of Public Convenience or Necessity (PCN) in order to be eligible to have it’s license application processed by the DCR. Currently, the following CPA’s have reached Undue Concentration caps for Storefront Retail licenses:

  • Central City
  • Central City North
  • Harbor Gateway
  • Sherman Oaks – Studio City- Toluca Lake – Cahuenga Pass
  • Sun Valley- La Tuna Canyon
  • Venice

SE applicants with a location in any of the above CPA’s may still apply in Phase 3 Round 1 via the PCN route.  After application submission, the DCR will reroute the PCN application to the appropriate City Council’s office where the applicant must work with the councilmember to get a PCN finding before they can continue their application process with DCR. Applicants subject to PCN will also be required to pay a $1,499.00 PCN Fee within 10 days of submitting their application. The DCR will not accept, review, or process any application from an applicant located in area of Undue Concentration unless there is a PCN finding from City Council.

As an aside, if you are planning on applying with an address in an area of Undue Concentration and then moving thereafter – BEWARE! After an application has been submitted, and throughout the licensing process, applicants are prohibited from changing the address of their proposed business premises.

Phase 3 Procedures 

The Phase 3 application process is more simple than we saw in the past with Phase 2. The application requires an applicant’s address, license type being applied for and a packet of requested documents.

Phase 2 Updates

Although everyone is seemingly caught up in Phase 3, Phase 2 applicants are still working towards their inspections and obtaining Temporary Approval. Currently, only a small percentage of Phase 2 applicants have passed DCR inspections and received their Temporary Approval. If your Phase 2 is now ready for inspections, sit tight. The DCR has currently paused all Phase 2 inspections and processing of Temporary Approvals in light of both Phase 3 application prep and the drafting of the Tier 3 SE Agreement. Remember the requirement that all Tier 3 SE applicants must enter into a Social Equity Agreement with the City to provide assistance to Tier 1 and Tier 2 SE applicants? Well, that’s finally happening! Stay tuned.

Welcome Dr. Imani Brown as City’s First Social Equity Program Manager

With Social Equity as the foundation for Phase 3, DCR has hired its first-ever Social Equity Program (SEP) Manager. Earlier this month, Dr. Imani Brown joined the DCR team to help develop and manage the SEP business and workforce development programming. Dr. Brown will work to manage SEP contracts, collect data to refine and improve SEP and plan educational programs to support applicants.  The approval of DCR’s $3 million budget request is proving to be a huge step towards developing a robust SEP.

Dr. Brown is an urban policy and planning expert and previously served as the Executive Director of External Partnerships of Government and Civic Engagement at USC and the Chief Deputy of Business, Transportation and Housing for California’s 37th Congressional District, where she developed small business incubators.

RFQ Update

As part of the SEP, the DCR is working to identify potential vendors to provide technical assistance to support the City’s Social Equity Applicants. This Request for Qualification (RFQ) will allow the DCR to begin the process of developing and providing qualified SEP applicants business, licensing, and compliance assistance. Only vendors selected as a part of this RFQ will be authorized to provide the formal technical assistance. The DCR moved swiftly to issue a Request for Qualifications (RFQ) on June 5, 2019, to retain on-call business development services for the City’s SEP. Through this process, DCR will identify one or more consultants to develop and conduct business development curriculum, training, business, licensing and compliance assistance, and related services intended to support applicants and licensees eligible for the SEP. The application process closed last month for those applying to provide assistance and service to SE applicants. However, in light of the DCR’s grant funding, they are looking at re-releasing the applications and giving service providers and businesses another chance to become part of the DCR’s team of on-call business development services.

With so much City resources going into cannabis in Los Angeles, everybody’s heads seem to be spinning.  We will see how it all plays out on September 3rd and are going to have a lot to discuss in the coming months.

Disclaimer: This article has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice.

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