Cannabis Retail Applicants Suing Los Angeles Over Licensing Process

Applicants vying for a cannabis retail business license in L.A. say the first-come, first-serve process the city used was fundamentally flawed. The Social Equity Owners and Workers Association, along with one of its members, have filed a lawsuit that would compel the city to either consider all the licensing applications it received last fall or develop its own process that would offer an equal shot to all applicants.L.A. marijuana retail lawyer

As the Los Angeles Times reports, the latest round of cannabis retail business licensing took place in December, with the goal of issuing a total of 100 new licenses to social equity applicants.

The problem, according to the plaintiffs in this case, was that some applicants were given early access to the online application form, effectively pushing the rest of the applicants to the back of the line. Upon investigation, it appears internet speed was a factor in how quickly some applicants were able to submit their requests for consideration. The most disproportionately affected neighborhoods and individuals would be more prone to have slower internet speeds.

As our L.A. cannabis retail attorneys can explain, a social equity applicant is a person who have been disproportionately impacted by the failed War on Drugs. In California, the Social Equity Program is broken down into three tiers, each with varying benefits and requirements. These include criteria such as being low income, having a prior marijuana criminal conviction, having lived 5 years or more in an area designated to be disproportionately impacted and must own a certain portion of the business for which they are seeking licensing.

The city called for an audit on the Social Equity Program licensing, which the Los Angeles Department of Cannabis Regulation says concluded the city responded appropriately to complaints and that there was no evidence of unfairness.

However, the audit also noted that the DCR also told numerous applicants that they would not be able to sign into the platform prior to 10 a.m. on the designated day – something that had to be done before the application process could start. However, this was not true, as more than 220 applicants were able to log on to the system prior to that. A couple dozen of those were able to begin the application process prior to 10 a.m., but Auditors found this was enough to put the marijuana company start-ups who listened tot he DCR and waited at a distinct disadvantage.

The city did push those early applications to the “back of the line,” where they would have been had they started the process at 10 a.m.

Representatives with the SEOWA argued that in any competition, participants have to start at the same time or at least have correct information on when it will start. That didn’t happen in this case, they say. Further, despite a meticulous effort, the group says it hasn’t been able to find any applicants who started the application process at the pre-designated start time who were then selected to move on to the next phase.

As our L.A. marijuana retail lawyers understand it, internal recommendations for improving the roll out of the next phase of the social equity program include:

  • Tightening criteria for qualification.
  • Giving priority processing to applicants previously unable to snag a license for a new shop for other kinds of businesses, such as manufacturing or delivery.

These haven’t yet been approved, but it seems likely some changes will be made to the process. Whatever is decided, our cannabis lawyers

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 714-937-2050.

Additional Resources:

Los Angeles Department of Cannabis Regulation Sends New Licensing Process Recommendations to City Council, April 16, 2020, By Patrick Williams, Cannabis Business Times

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