City of Los Angeles Releases Commercial Cannabis Regulations

Yesterday, the City of Los Angeles released the new commercial cannabis regulations. These regulations were provided to inform cannabis related businesses of the necessary requirements to obtain a city business license. Obtaining a local license is a prerequisite for being approved by the State Bureau of Cannabis Control.

The new regulations provide some insight into the high standards set by officials. We recommend reviewing the full set of commercial cannabis regulations, but we want to cover a few things we found relevant for cannabis retailers and dispensaries.

Dispensary Inspections

Prepare to be inspected. The Los Angeles Department of Cannabis Regulation will be sending out an agent for a pre-license inspection once the retailer has submitted a completed application. Passing this inspection will allow your business to be eligible for a temporary or permanent license.

Once you’ve been approved for your cannabis business license, you must continue to meet all regulatory requirements as DCR agents are allowed to inspect your dispensary without notice. Failure to comply with these surprise inspections could potentially cost you thousands in fines or even be grounds to revoke your business license. The lesson here is to ensure your cannabis retailer is consistently maintaining a high level of compliance with the commercial cannabis regulations.

Retailer Requirements

Every marijuana dispensary will be required to meet specific commercial cannabis regulations to stay in business. We’ve outlined the major retail obligations below so you can be prepared when the new regulations take effect.

• Business licenses are non-transferable, however, if there is a change in ownership the Licensee can submit a change in ownership application to be reviewed and approved by DCR.

• The name and contact number of the neighborhood liaison is required to be displayed and visible from outside the cannabis retailer.

• A retailer business license must be prominently displayed on the premises and visible from the exterior of the storefront.

• You are required to appoint or designate a supervisor or manager to be in charge at all times during business hours.

• Licensees must attest they will not manufacture, prepare, label or package any products other than marijuana and marijuana related products.

• All applicants must adhere to all operational requirements set by the state.

• A commercial cannabis retailer must allow DCR agents access to the facility to complete inspections.

Compliance Violations

If and when violations of the new regulations happen, the Department of Cannabis Regulations will issue a Notice of Violation within five years of the alleged infraction. However, this does not prevent other enforcement agencies from taking their own legal recourse.

The DCR has laid out specific classes of violations in order to assess fines and punitive measures for thos who fail to meet commercial cannabis regulations. The violation classes are as follows: Minor, Moderate, and Serious. If a dispensary is found to have multiple low level violations within a two year period, the violation may elevate to a higher class. Every Notice of Violation will include a brief statement of the violation, a description that classifies the infraction as minor, moderate, or serious, a statement on whether it can be corrected, and a time frame in which it should be corrected.

Penalty Fines

Occasionally a commercial cannabis retailer will be charged with a violation and by assessed administrative fines. The amount of each fine is based on the violation classification. We’ve provided a breakdown of the fines below.

• Minor Violations will incur a fine equal to 50% of the current cannabis license fee for each violation.

• Moderate Violations will incur a fine equal to 150%  of the current cannabis license fee for each violation.

• Serious Violations will incur a fine equal to 300% of the current cannabis license fee for each violation.

Los Angeles dispensary owners, managers and budtenders should all be aware of the new commercial cannabis regulations. To review the complete rules and regulations visit the Los Angeles Department of Cannabis Regulations website. Avoiding violations will keep you business profitable and hopefully below the radar.