The already-troubled licensing system for Los Angeles’ cannabis market now faces yet another setback as city leaders halted the licensing approval process. As of mid-November, only 189 legal stores were open to serve over four million residents, and furthermore, cannabis stores in the city operate on temporary licenses only—unlike several other major California cities with mature markets.
On Oct. 28, Los Angeles City Council President Herb Wesson sent a letter urging the Los Angeles Department of Cannabis Regulation (DCR) to suspend its approval process. Wesson called the licensing process “compromised” as some applicants allegedly had early access to the online system. The DCR almost immediately disputed the claims.
Wesson called for an audit and a do-over of its “Phase 3 Retail Round 1 Social Equality Program” licensing round after explaining why he believes that the process wasn’t fair and transparent. Wesson recommended putting the licensing process on hold until the department can ensure that the system is fair for all parties involved.
“Over the last couple of weeks, including at the Cannabis Regulation Commission meeting last Thursday, allegations have been made that multiple applicants had access to the application portal prior to the announced start time of 10 a.m. on Tuesday Sept. 3rd,” Wesson wrote in the letter addressed to Executive Director Cat Packer. “Unfortunately, these allegations have been substantiated by the Department at the Commission meeting and the Phase 3 Retail Round I process was compromised.” Wesson went on to say that there was “no scenario” in which the current existing licensing process could work.
The miscommunication between the DCR and Los Angeles City Council is only the tip of the iceberg. Proposition D only gave a small number of Los Angeles dispensaries limited immunity, which falls short of being a licensed, legal operation. As markets in other California cities mature, the local Los Angeles market relies on temporary solutions for the time being.
“Over the last couple of weeks, including at the Cannabis Regulation Commission meeting last Thursday, allegations have been made that multiple applicants had access to the application portal prior to the announced start time of 10am on Tuesday September 3rd.”
Wesson wrote in a letter that the department should suspend all Retail Round 1 applications, refund all applicants and cancel all invoices, and finally prepare a full audit and report by an independent third party, Wesson.
Initially, it was unclear how the DCR would react to Wesson’s letter of reprimand. DCR Assistant Executive Director Michelle Garakian provided CULTURE with a statement to help get a glimpse of how the department reacted to Wesson’s letter. “. . .The Department will continue to process Phase 3 Retail Round 1 applications as established in LAMC 104.06.1 until 100 Social Equity Program Applicants are determined to be eligible for further processing,” wrote DCR Executive Director Cat Packer. “However, the Department will not continue to the next phase of licensing until the audit process is complete.” In the meantime, additional applicants will have to wait for the licensing process to resume once the audit has taken place.
While the DCR grapples with the audit, it’s important to note that it takes years for cannabis markets to stabilize, and Los Angeles is among the largest cannabis markets in the world. Little by little, improvements will be made to the system as local officials iron out the existing program. Los Angeles represents one of California’s most challenging markets to oversee, by anyone’s standards.