L.A. Prepares Phase 3 Social Equity Licensing

In 2019, the L.A. Department of Cannabis Regulation announced it would open the application window for Phase 3 licensing for social equity cannabis businesses. The application portal was set to open on September 3 at 10 a.m. In total, applicants would vie for 100 dispensary licenses: 75 for Type 1 social equity applicants and 25 for Type 2.

Social Equity Pre-Vetting

In late May, the Department of Cannabis Regulation launched Social Equity “Pre-Vetting,” the Social Equity Program eligibility verification process. The agency designed it to provide technical assistance to prospective applicants. Moreover, it helped them navigate the eligibility verification steps.

To support applicants, DCR hosted four citywide workshops with more than 3,000 cannabis entrepreneurs. In addition, it held multiple stakeholder meetings and scheduled roughly 250 one-on-one training sessions on the verification process.

Areas of Undue Concentration

Social equity applicants had to submit their application and supporting documentation before July 29, or they would be automatically disqualified. Some businesses also tried to open in communities already flooded with dispensaries, which made them ineligible due to undue concentration. As a result, the L.A. Department of Cannabis Regulation announced that the following areas were off-limits for Type 10 retail license applicants:

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

Public Convenience or Necessity

There were some exceptions in these communities, though they were few and far between. Each required a finding of Public Convenience or Necessity (PCN) from the City Council. Therefore, DCR would only accept and process applications that had the City Council’s seal of approval. If you wanted to take your chances, you could still apply on September 3, but you would likely be re-routed automatically to the PCN process.

Dispensary applicants then had to pay a $1,499 PCN fee within 10 calendar days of submitting their request. The PCN would be transmitted to the Office of the City Clerk for City Council consideration. Importantly, these applicants had to remember that “PCN requests are not pending applications, do not receive a timestamp, and do not prevent another applicant from submitting a competing PCN request in the same area.”

Dispensary Location Documentation

Beyond the social equity qualification, one of the most essential Phase 3 criteria was proof of right to commercial property for the intended license type. The L.A. Department of Cannabis Regulation wanted to see evidence in the form of a lease or deed in the applicant’s name, plus proof of deposit for a lease. In addition, the property had to comply with all sensitive-use buffers and zoning requirements.

If applicants had already completed their due diligence for social equity verification, and their property met the buffer, zoning, and undue concentration requirements, they could then focus on the licensing checklist released by DCR.