A recent uptick in enforcement actions against marijuana businesses has the Los Angeles City Council considering a provisional licensing system that could come on line well before lawmakers implement comprehensive cannabis regulations.
A motion introduced late last month by Councilman Paul Koretz would establish an interim cannabis business registry that would allow a portion of the city’s dispensaries, cultivators, distributors, and other marijuana-related companies to operate aboveboard.
Koretz said in a statement there was a clear need for a stopgap measure that would help delineate bad actors from pot shop owners who intend to comply with nascent cannabis regulations.
“The surge in local enforcement (action) … is placing millions of dollars of business investment in jeopardy, costing jobs, and creating a situation whereby it will be more difficult for dozens of potentially legitimate businesses to apply for city cannabis business licenses once the new city ordinance is in place later this year,” Koretz said. “At the same time, we continue to receive numerous complaints about problem dispensaries against which city enforcement has been slow to take action.”
City Attorney Mike Feuer said through a spokesman he could not discuss the interim registry because doing so would breach attorney client privilege. However, he maintained his office had aggressively targeted noncompliant cannabis businesses for four years and would continue those efforts.
The city attorney has discretion to bring enforcement actions against pot shop owners under the city’s old medical marijuana laws, established in 2013 by the voter-approved Proposition D.
Many marijuana industry players are upset at Feuer’s continued strict enforcement of Proposition D after voters passed a new cannabis law, Measure M, in March. That ballot initiative, which authorized the City Council to enact an ordinance to regulate and tax marijuana, came in the wake of a statewide referendum passed in November legalizing recreational pot in California.
Dustin McDonald, vice president for government relations at Irvine-based pot shop search engine Weedmaps, said the city should focus on implementing Measure M so that licenses for cannabis businesses are available by the scheduled Jan. 1 rollout of the state’s permitting system.
“Throwing taxpayer money out the window to conduct whack-a-mole enforcement while the city scrambles to put together a policy solution is not the right answer,” McDonald said. “The Koretz motion should be expanded to establish a set of preliminary regulatory criteria that all dispensaries in the city would have to meet until formal licenses are issued later this year. This would be a big step in addressing the chaos of an unregulated environment established by Prop D.”
McDonald is not alone in his support for Koretz’s proposal: Most marijuana business owners and industry groups in the city of Los Angeles – including the Southern California Coalition, which helped spearhead the passage of Measure M – back an interim registry.
“It’s really a win-win proposal put forward by council member Koretz,” said Adam Spiker, executive director of the coalition. “It gives compliant operators a provisional license so they are protected while the council is building out the full regulatory system. For the city, seeing who registers can start providing a picture as to who plans on applying for (formal) permits.”
Growing market
Spiker’s latter point is particularly important. While the state’s total cannabis market is approaching $6.5 billion, there is almost no data on the size of L.A.’s pot industry.
Without an idea about the number of cannabis businesses that will apply for licenses when the council finalizes regulations, setting up a framework for how to process applications is difficult, Spiker and others said.
It also creates a problem for the council, which is struggling to come up with a plan that allows for legal cannabis commerce without overwhelming Los Angeles with storefronts. While no formal criteria have been released – the council is expected to put out a draft of its formal ordinance this week – industry insiders said a leading proposal would not establish a hard cap on the number of licenses issued, but rather require pot shops be located at least 1,000 feet apart within certain zones. Measure M’s land-use guidelines allow marijuana storefronts to be regulated based on their proximity to schools, residential areas, parks, and stores selling candy to children.
Most in the industry consider a zoning option to be a better idea than a cap, but McDonald said that plan also has issues.
“A proposal requiring 1,000 feet – the equivalent of three football fields – between dispensaries in the limited areas of L.A. where dispensaries will be allowed is not an access solution,” he said. “There are thousands of industry operators here who will seek a license from the city and the city will need to accommodate as many of them as possible. The alternative is a huge and costly illegal market.”
The city has to juggle numerous other marijuana regulation question marks, including picking five members for a Cannabis Licensing Commission, which would oversee the permitting process in Los Angeles, by a self-imposed Sept. 1 deadline.
Multiple sources familiar with the situation said City Council President Herb Wesson has tapped Cat Packer to be the commission’s executive director. Packer serves as California policy director for the nonprofit Drug Policy Alliance.
A spokeswoman for Wesson did not confirm or deny Packer is the frontrunner for the position, saying only that multiple names had been submitted to Los Angeles Mayor Eric Garcetti who has final say on the executive director appointment. Garcetti has been noticeably absent from any discussion of cannabis regulation in the city even though he would control three of the five appointments to the proposed Cannabis Licensing Commission, with the council controlling the other two.
Mayoral spokesman George Kivork did not respond to questions about whether Garcetti had identified candidates for the positions or whether he is reviewing names for the executive director post, but said in a statement the mayor is waiting to review the council’s draft ordinance.
