After California legalized recreational cannabis for adults in late 2017, leaders in the City of Los Angeles (City) made it their goal to give entrepreneurs affected by the “war on drugs” an advantage in what would become the City’s highly competitive cannabis market. They planned to implement this goal through creation of the Social Equity Program, which is within the City’s existing licensing and regulatory program. The Social Equity Program stated goal is:
. . .to promote equitable ownership and employment opportunities in the cannabis industry in order to decrease disparities in life outcomes for marginalized communities, and to address the disproportionate impacts of the War on Drugs in those communities.
In other words, the program targets individuals who are low income, have past cannabis arrests and or convictions, and those that live in “disproportionately impacted areas.” The Social Equity Program is meant to offer qualified individuals with an advantage in the cannabis market by providing assistance to support cannabis business ownership.
Social Equity Program
As the lead agency for licensing and regulating cannabis in the City of Los Angeles, the Department of Cannabis Regulation (DCR) is responsible for implementing the Social Equity Program and seeks to ensure that disproportionately impacted individuals and communities in the City have fair and meaningful access to the new economic opportunities afforded by legalization and the commercialization of the local cannabis industry. For those interested in owning and operating a licensed cannabis business, priority application processing is available, which seeks to afford eligible Social Equity Program applicants an opportunity to be first-to-market, which is critically important given the City’s limited number of available licenses. Applicants may apply for one of the program’s three tiers, which offer varying requirements and benefits. Tier 1 applicants qualify for the most benefits, including: expedited application and renewal processing, business licensing and compliance assistance; and possible fee deferrals and access to an Industry Investment Fund (if established).
Delays
Unfortunately, the City’s vision for the Social Equity Program has not unfolded as smoothly as anticipated. There have been severe delays in getting the program off the ground due to slow implementation of the City’s overall cannabis licensing process. The City has yet to issue any permanent licenses for commercial cannabis activities. Instead, there are approximately 185 businesses with temporaryapproval to sell cannabis products. The delays aren’t helped by the City’s struggle with a proliferation of unlicensed dispensaries. The City has had significant trouble targeting the large number of illegal cannabis businesses popping up around the City. Recently, the City Council passed an ordinance authorizing the Department of Water and Power to shut off utilities at any illegal cannabis establishment.
Conclusion and Implications
Despite the slow rollout of the Social Equity Program, the City and DCR remain focused on moving the program forward. On May 28, 2019, DCR began the Social Equity Program’s eligibility verification process, which will remain open through July 29, 2019. In addition, the City is now looking to put together a team to help make the Social Equity Program successful moving forward. On June 14, 2019, DCR announced the release of a Request for Qualifications (RFQ), whichseeks to retain on-call business development services for the program. The RFQ is seeking consultants to develop and conduct business development curriculum, training, business, licensing and compliance assistance, and related services to support applicants and licensees eligible to participate in the Social Equity Program. The initial submission deadline to the RFQ is Friday, July 12, 2019. The Los Angeles City Council has adopted a budget policy to appropriate $3 million per year for three years to support the Social Equity Program and the services offered by the RFQ.
Additional information and updates about the City of Los Angeles’s Social Equity Program can be found on the City’s Department of Cannabis Regulation website at the following link: https://cannabis.lacity.org
(Nedda Mahrou)
