Licencing of cannabis businesses has been rather slow out of California since the state started accepting applications last December. The deliberate pace caused for early economic projections to be downgraded by some analysts, a rare occurrence thus far as most states have exceeded initial estimates. The California market is about to get a shot of adrenaline as Los Angeles County, the most populous county in the United States, is finally ready to welcome licensed and regulated commerce within its boundary, officially considering three options, as Hilary Bricken notes in AboveTheLaw.com:

For option number 1, the County came up with 8 components that would make up a comprehensive regulatory framework for all license types “that promotes health equity, ensures the health and safety of consumers and people living and working nearby, prevents cannabis businesses from causing blight or becoming nuisances in their communities, takes residents’ concerns into account, and does not promote commercial cannabis activities at the expense of other considerations.” Those components are to:

  1. Establish a cannabis commission to oversee the licensing and regulatory enforcement program in conjunction with the existing Office of Cannabis Management.
  2. Complete a health impact assessment on the health equity impacts of permitting cannabis businesses in unincorporated areas. This assessment would inform the county regarding the communal impact stemming from regulation and the establishment of cannabis businesses within certain communities.
  3. Create permits to allow cannabis stores, delivery services, indoor cultivation, manufacturing, distribution, and testing laboratories in unincorporated areas. Outdoor cultivation would be a no-go.
  4. Institute permit caps. In the first two years of the program, there would be no more than 25 cannabis store permits, with no more than 5 store permits per supervisorial district and no more than 2 cannabis store permits in any one unincorporated community. There would also be 25 cannabis delivery-only permits, with no more than 5 delivery-only permits per supervisorial district, 10 cultivation permits, 10 manufacturing permits, 10 distribution permits, and 10 testing laboratory permits.
  5. Institute zoning limitations and buffers. Cannabis stores, delivery, and testing laboratories would only be allowed in heavy commercial and manufacturing zones and all other commercial cannabis businesses could only go into manufacturing zones. Stores would be required to locate not less than 1,000 feet from schools (K-12), 600 feet from day cares (including preschools), public parks, public libraries, licensed drug and alcohol treatment centers, and other cannabis stores, and 300 feet from off-site alcohol sales, such as liquor stores. All other commercial cannabis businesses would need to locate not less than 1,000 feet from schools (K-12) and 600 feet from day cares (including preschools), public parks, and public libraries. Maps of where operators could potentially go can be found here.
  6. Come up with a social equity program to reduce barriers to entry for those who were disproportionately impacted by the War on Drugs.
  7. Create a 15-member stakeholder advisory board to assist the cannabis commission and the board of supervisors.
  8. Create a business license category for commercial cannabis businesses (in addition to the required permits). The County is also discussing tax proposals for commercial cannabis activity if it opts to institute comprehensive regulation.

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Proposed County Option 2 would limit the types of businesses that could engage in a cannabis business in the County. It might do this by, for example, allowing only medical cannabis but no adult use cannabis, or just by allowing retail and delivery in an effort to curb the gray and black market shops that continue popping up.

County Option 3 would continue the ban on commercial cannabis activity in all portions of unincorporated LA County. Without exception, all of my firm’s California cannabis lawyers see this as unlikely to happen given the time and money the County has already spent analyzing its options and givn how many tax dollars it will lose by not going forward. LA County need only look at its inability to shut down illegal operators to know that its implementing comprehensive (or even limited) regulation will likely help with identifying good versus bad actors. If Los Angeles County wants to succeed with its cannabis regulations it will go with Option 1 and that is exactly what I see it doing.

Not only is Los Angeles County the most populous county in the U.S., but it’s also one of the most powerful economies in the world. Located within a state that is the 6th largest economy in the world, L.A. County would be ranked in the top 25 largest economies in the world by itself, with a gross domestic product of over $700 billion, a larger economy than Argentina, Belgium, and Sweden. California greatly aided the movement to end cannabis prohibition and it is important that the Golden State irons out its regulatory kinks, for both its own economy, but also for our greater movement. With Los Angeles County coming on board, it’s only a matter of time before the California cannabis industry starts realizing its vast potential.

Keep up to date with the latest info regarding the cannabis industry and network with top professionals, investors, and advocates at the International Cannabis Business Conference in Portland, Oregon this September 27th-28th. Get your tickets by September 12th to save $200! If you can’t make Portland, for some reason, the ICBC returns to San Francisco February 7th-8th, 2019