By Hilary Bricken, Co-Founder @ Harris Bricken
The final countdown is on for Round 1, Phase 3 retail licensing in Los Angeles. On September 3rd at 10 a.m., the L.A. Department of Cannabis Regulation (DCR) will open the flood gates to would-be Round 1 applicants. And in its own announcements on the subject, the DCR states that it has verified over 800 social equity applicants (out of 1800 applicants that applied–though the City is continuing to process people) that will vie for the first 100 coveted Type 10 retail licenses (75 of which will go to Type 1 social equity applicants and 25 of which will go to Type 2 social equity applicants). Where Round 1 licensing is first come, first served with an online application via the City’s Accela licensing portal, it’s going to be fast and furious on September 3rd to get a license.
In case you missed it, I’ve written many times about the evolution of and qualifications for Phase 3 licensing in L.A–see here, here, and here (and here for delivery licensing). Importantly, if you failed to get your social equity applicant qualified by the City by July 29th, you’re automatically out. And if you were proposing to apply in an area already hit by undue concentration, you’re also toast. The City announced that the following community plans are off limits for Round 1 applicants:
The City’s useful licensing map shows us what’s still up for grabs by community plan when it comes to undue concentration limitations.
If you’re applying in an area that’s reached undue concentration, the City isn’t leaving you completely hanging. Instead, you must first receive a finding of Public Convenience or Necessity (PCN) from the City Council before DCR will accept and process your application. You can still file on September 3rd, but you’ll be re-routed automatically to the PCN process. You have to pay a $1,499 PCN fee within 10 calendar days of submitting the PCN request. The PCN request is then transmitted to the Office of the City Clerk for City Council consideration. Importantly, “PCN requests are not pending applications, do not receive a timestamp, and do not prevent another applicant from submitting a competing PCN request in the same area.”
One of the hallmark criteria for Round 1, in addition to meeting the social equity qualification, is proof of right to real property for your intended license type. And the City has revealed what it wants to see to prove this requirement–either a lease or deed in the name of the applicant, with proof of deposit in the event of a lease (see discussion below). The real property also has to meet all sensitive use buffers and zoning requirements, too.
If you’ve checked the boxes on social equity verification and your property meets the sensitive use buffer, zoning, and undue concentration requirements (and you have a lease or deed in the name of the licensing applicant), you should be turning your immediate attention to the licensing checklist recently compiled by DCR. Here are the key elements for filing on September 3rd:
Applicants should not hesitate to begin forming their business entities and generating their “equity share” documents, which are extremely important and will take time to structure and negotiate (and they should afford contingencies for what happens if a Round 1 license is not secured). In addition, applicants, right now, should begin gathering the necessary information to satisfy all of the disclosure requirements they’ll have to face on September 3rd. Without a doubt, Round 1 in L.A. has been long anticipated and many, many applicants will fight for the first 100 licenses. A combination of organization, preparation, and speed at the computer will rule the day for Round 1 in Los Angeles. So, prepare now!
Re-published with the permission of Harris Bricken and The Canna Law Blog
Hilary Bricken is a partner with the law firm Husch Blackwell, where she advises clients in the cannabis, healthcare, and life sciences spaces on transactions, regulatory compliance, governance matters, and other corporate needs. Hilary may be reached at [email protected].
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