The Next Step Los Angeles’ Delivery Pilot Program takes form

A lot of attention has been paid recently to brick and mortar retail licenses in the city of Los Angeles for Phase 3 licensing, which is set to commence in early September. While Los Angeles is trying its best to champion social equity with its Phase 3 storefront licensing, it’s also going to develop a Delivery Pilot Program for social equity applicants in the city.


As a recap of Phase 3 in LA, the first 100 Type 10 (brick and mortar retail) licenses will go to social equity applicants on a first-come, first-served basis in Round 1. For Round 2, which will be for 150 Type 10 retail licenses, this will also be on a first-come, first-served basis. The Round 1 window is going to be extremely short–only 14 calendar days (preceded by a 15-calendar day notice from the Department of Cannabis Regulation [DCR]). Businesses are only eligible to apply if they have a verified Tier 1 or 2 social equity “Owner” (with the mandated equity share in the business).


The Round 2 window is 30 calendar days for 150 licenses that will also go to pre-verified Tier 1 and 2 social equity applicants (without any processing priority between those two groups). Note that the DCR began the pre-vetting process for social equity applicants for Round 1, Phase 3 licensing very recently—on May 28. This window is open until July 29.


Specifically, regarding Type 9 non-storefront, delivery-only licenses, the DCR will, on a date to be determined in the future, begin accepting applications for delivery (there will be a 15-day notice before this particular window opens, too). Eligibility for a Type 9 license hinges on submitting at the time of filing: 1) a copy of an executed lease agreement with proof of a deposit or property deed for the business premises; 2) a premises diagram; 3) proposed staffing, security, and delivery plans; 4) a dated radius map including horizontal lines and labeling of any sensitive uses relative to a Type 9 License; 5) an indemnification agreement with the city; 6) a current Certificate of Occupancy for retail use for the business premises; and 7) all business records and agreements necessary to demonstrate that a Tier 1 or Tier 2 social equity applicant owns the minimum equity share in the Type 9 applicant (i.e., a Tier 1 must own at least 51 percent and a Tier 2 must own at least 33 percent). Criteria number 7 is “as applicable” in that the city must also issue on a 2 to 1 basis Type 9 licenses to general public, non-social equity applicants.


Regarding order of priority for Type 9 applicants, the DCR will process a total of 60 Type 9 applicants in Round 1 of licensing (delivery actually has three rounds). Forty of these licenses will go to first Tier 1 and 2 social equity applicants, and 20 will go to the first general public applicants that don’t have any social equity component (to satisfy the 2:1 licensing ratio required under LA law). These licenses represent the city’s Delivery Pilot Program, and these applicants must submit 1-7 (7 as applicable) per the above at the time of filing.

“The bottom line is this: Start now in gathering your business and real estate documents to ensure that you make a timely submission to the city when the delivery window opens . . . ”


For Round 2 of delivery licensing, importantly, if you applied but were rejected for a Type 10 license in Rounds 1 or 2 because your proposed storefront location was in a geographic area of undue concentration limits or within a 700-foot radius of another Type 10 application, you get priority processing for a Type 9 license relative to all other applicants except those in the Delivery Pilot Program.


And Round 3 of delivery licensing is for those non-retail applicants that applied for licensure in Phase 2 licensing. Those applicants can, at a time TBD by the DCR, amend their Phase 2 annual applications to include delivery.


Very importantly, even though we don’t have a set date yet for when delivery licensing will open in Phase 3, if you want social equity delivery licensing in Phase 3 as part of the Pilot Program, you still need to get vetted now during the social equity vetting window that’s open until July 29.


The bottom line is that applicants should start now in gathering your business and real estate documents to ensure that you make a timely submission to the city when the delivery window opens, and do not forget to right now (through July 29 only) get pre-qualified as a social equity candidate with the city if you want in on the Pilot Program.

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