The LA City Council held a meeting today to follow up on the April 1 meeting of the Budget Committee and approve the recommendations made on April 1. After a good deal of discussion about the enforcement efforts against unlicensed dispensaries, the City Council approved all the recommendations with only minor revisions. This means the licensing process can now move forward.
The funding approved today by the City Council will allow the Social Equity Program to move forward, which is an integral part of the upcoming Phase 3 licensing process awarding cannabis licenses to new businesses in the City of LA. So far, the licensing has been delayed while the City has worked through issues surrounding the Social Equity Program. We are still waiting for the City to announce details of the timing of the next phase of LA cannabis licensing. This phase will start with the issuance of 200 retail storefront and 40 retail delivery licenses, issued largely to Social Equity applicants.
Now that the City Council has approved the Social Equity funding, we expect the licensing to open up soon, and now is the time for anyone interested in applying to find a property and get all the elements of their applications in order.
Before the ruling on the Social Equity funding, there was an update on enforcement efforts against unlicensed cannabis businesses, including utilities disconnects, cease and desist letters, and search warrants.
So far, the City has been shutting down the illegal businesses bureau by bureau. The City started the crackdown in the Valley, where it has gone to 22 locations, with 10 more scheduled for next week when it will be finished with the Valley. Then, it will move to the South bureau, where it will start with 10 locations in the Harbor area, and then move to the Southeast. The City has also been disconnecting utilities from unlicensed businesses in the past month. $2.3 million has been set aside by the police department for cannabis enforcement.
A member of the LAPD Narcotics Division and Deputy City Attorney Meredith McKittrick spoke about enforcement efforts. Ms. McKittrick discussed the potential for imposing a $20k civil penalty on property owners at the end of civil litigation, but noted that such litigation can sometimes take years. As of 4/5/19, City has filed 216 criminal cases involving 182 allegedly unlawful retail locations where people were charged with misdemeanors. During today’s hearing, City Council members complained about the slow pace of the enforcement efforts, and argued the City should be taking more action against property owners at illegal locations and not just illegal operators. As discussed during the meeting, the City Attorney’s office has a list of unlicensed businesses, and has been giving each address to a paralegal who identifies the property owner and they send cease and desist notices.
At the end of the meeting, the recommended actions from the Chairman of Budget and Finance committed were approved unanimously by the City Council, with minor changes, as set forth below:
1. DIRECT the Department of Cannabis Regulation (DCR) and the Los Angeles Police Department (LAPD), with assistance of the City Attorney and Information Technology Agency, to report on the establishment of a complaint information system which would allow all departments and offices to easily share complaints about cannabis activity with the DCR, LAPD and the City Attorney.
2. DIRECT the LAPD, Los Angeles Fire Department (LAFD), DCR, and Los Angeles Department of Building and Safety (LADBS), with the assistance of the City Attorney and any other relevant offices or departments, to establish a working group to manage and direct enforcement efforts against illegal cannabis businesses.
3. DIRECT the LAPD, with the assistance of the DCR and City Attorney, to proceed with a program to send cease and desist or warning letters to businesses suspected of engaging in illegal cannabis activity as well as property owners who rent to illegal proprietors.
4. INSTRUCT the Chief Legislative Analyst (CLA) and City Administrative Officer (CAO) to report on illegal enforcement budget needs.
5. REQUEST the City Attorney to prepare and present an Ordinance whereby the DCR would receive $3 million annually to fund the Social Equity Program for three years.
6. INSTRUCT the CLA and CAO to report on the cannabis budget policy; and, INSTRUCT the CLA to report with an analysis of youth development funding in the City, including where gaps in current funding exists.
ADDITIONAL CITY COUNCIL ACTION UNANIMOUSLY PASSED TODAY, SUBJECT TO APPROVAL OF THE MAYOR:
1. CONCUR with Recommendation Nos. 1, 3, and 4 of the Rules, Elections, and Intergovernmental Relations Committee report dated November 16, 2018 (attached to the Council file No. 18-1800-S2). THOSE RECOMMENDATIONS ARE COPIED HERE:
2. DIRECT the LAPD, LAFD, DCR, LADBS, and CLA, with the assistance of the City Attorney and any other relevant offices or departments, to establish a working group to manage and direct enforcement efforts against illegal cannabis businesses.
3. REQUEST the City Attorney to prepare and present an Ordinance whereby the DCR would receive $3 million annually for three years to fund the Business, Licensing, and Compliance Program.
4. INSTRUCT the DCR, CLA, and CAO to report on the cannabis budget policy; an analysis of youth development funding and other Social Equity Program needs in the City; and, gaps in the current funding and potential policy defects.
5. INSTRUCT the DCR to submit an annual budget and spending plan for the Social Equity Program; and, INSTRUCT the DCR and the CAO, and REQUEST the City Attorney, to report whether Cannabis Regulation Special Revenue Funds can be used to fund the Social Equity Program.