Season’s Greetings!
I’m glad to provide a bit of good news in this December issue of DCR’s News Bulletin. Today, Mayor Karen Bass signed into law a deadline extension for 100 Social Equity Applicants selected in the Phase 3 Retail Round 2 Retail Cannabis License Lottery, allowing them three additional years, until December 31, 2026, to enter the license application process. The original deadline expired on December 8. The new ordinance also allows DCR to continue accepting Temporary Approval applications from retail social equity applicants through 2031.
The move by the City Council came after the passage of the state’s SB 51 that allows the State of California’s Department of Cannabis Control to extend its provisional license program by allowing cannabis equity retail applicants or licensees to obtain or renew state provisional licenses after the prior deadline of June 30, 2023.
DCR is pleased to continue to provide these license application opportunities for Social Equity Applicants.
I also wanted to note that in the upcoming month, Mayor Karen Bass will celebrate her one year anniversary leading the 2nd largest city in the country. Her strong leadership and clear vision for Los Angeles in the past year have strengthened our economy, housed thousands of Angelenos, put L.A. on the frontlines in the fight against climate change, and improved daily life for each and every community. Learn more about her achievements below.
As you read this bulletin, please find the feature article on one social equity applicant, Orlando Padillo, who is taking full advantage of opportunities to turn one bad moment in his life into good.
DCR wishes you and yours a warm, safe and festive holiday season.
Best,
Michelle Garakian
Executive Director
Department of Cannabis Regulation
Happy Holidays from your friends at the Department of Cannabis Regulation
Social Equity Business Highlight: The Chronic
Where Opportunity and Passion Meet
Though Orlando Padilla opened up his cannabis retail storefront, The Chronic, in the spring of 2023, he still hasn’t given up his “day job.”
The social equity licensee, raised in Elysian Park, knew from the beginning that starting a new business - especially one in the cannabis industry - would be a long road. While he relies on the income from his production company to pay the bills, he is still putting in the time, effort and money needed to make his Northeast Los Angeles cannabis store profitable. For Padilla, it’s personal.
“You know with any business, with anything that you are passionate about [you have to put in the work],” he said. “Speaking for myself, personally, you know, I went to prison for this. This is vindication for me. It’s cool, you know, now I can tell my kids that I was ahead of the [cannabis] curve. So I am not giving up on this. Heck no.”
Padilla, who is in his mid 40s, had the opportunity to apply for a retail storefront cannabis license in 2019. He was eligible under DCR’s social equity program in part due to his cannabis arrest about 25 years ago.
“I went to state prison for having 2 ounces of weed and 9 grams of mushrooms,” Padilla said. “It was all for personal use but it didn’t matter. Going to prison was really heavy to deal with back then. When I got home, it was an interesting journey. Being there [in prison] and seeing what goes down, a lot of people change. They were really normal dudes that went in and after 5-6 months they were completely corrupted. It was nuts.”
“When I came home,” he said, “I had newly acquired knowledge in life and I kept going on. Luckily, I still had my entertainment stuff thriving.”
After his release from prison, he went to community college to earn two different degrees in business. Padilla continued with deejay gigs that led him later to produce large-scale events. In 2019, he rode the cannabis wave and applied for and received cannabis cultivation, manufacturing and distribution licenses. That knowledge base was put to good use in starting The Chronic.
Once he found the location in the El Sereno community of Los Angeles, he took two years to build out the space that features faux ivy covered walls on the outside and a circular display case on the inside.
“I wanted to do it right,” he said. “So I took my time.”
Even with a vision and some business experience, Padilla knew he needed help and sought out a managing partner with retail experience. Friends put him in touch with the right guy.
“That’s where Travis [Miller] came in to save the day,” he said.
Miller is also a social equity applicant as well as a student. He manages other retail cannabis stores in Northern California. Over the years, Miller has seen the rise and fall of many cannabis businesses, but he said he is hopeful The Chronic will be profitable soon.
Padilla added, “It’s tough. If you aren’t hitting a homerun, you are not going to make it. By that I mean, there is overhead, taxation, location to consider. Not to talk about specific numbers but we had what I thought were amazing numbers last month. And Travis was like, ‘Yeah, we didn’t lose any money. Or maybe we lost just a little bit.’ I said, ‘Oh my God, what does that mean?’ We are grossing what a normal business would be crushing it, just out of the park. It’s tough.”
Part of the issue, they said, is that cannabis products have their own taxation rules at the state and city level. That fact is a point of contention for cannabis businesses.
“Our prices are higher [due to taxes] and it drives people to the illicit market,” Miller said. While the pair lament that fact, they understand the consumer’s tough choice. “It’s just not fair.”
“I didn’t think it would be that tough,” Padilla said. “But we are doing everything right. We have our emblem [showing that we passed the public health inspection]” Plus, unlike illegal businesses, they sell safe and tested products, he said.
The Chronic team recently applied and received DCR’s Social Equity Program SEED grant funds for rental assistance. Padilla wants to take advantage of DCR’s joint program with the LA County Bar Association that offers pro bono and low bono legal services. Every little bit of assistance helps, the pair said, but they hope things do change legislatively to make it easier to achieve success.
“As a partnership, we have tons of business acumen from different business lines, and if we didn’t have that there is no way [we would still be open]. I mean we haven’t made a dollar and probably won’t for a long time…but we are in it for the long haul.”
Even with the challenges, Padilla and Miller are optimistic people in general. They know they landed into some good luck, too. Even though initial supporters and investors had turned down many other people, investors said yes to Padilla. When Padilla was naming the store, he knew choosing The Chronic might create issues in acquiring a website of the same name since the domain name was already owned by rapper Dr. Dre. However, Padilla was shocked that he was able to negotiate a reasonable price.
As for the good luck that got him to this point, Padilla said, “I’m not mad at that.”
The Chronic is located at 5485 Alhambra Road in Los Angeles.
DCR Updates
A TECHNICAL NOTE: SOCIAL EQUITY PROGRAM WEBSITE
The Social Equity Program website dedicated to the Business, License and Compliance Programs and DCR Job Board is undergoing maintenance. For information on SEP programming, please visit the Business, Licensing and Compliance page of the DCR website..
UPDATED RULES AND REGULATIONS
DCR updated its Rules and Regulations. Learn more about the updates including those to Regulation No. 5 here.
2023 - A Year In Review
In January 2024, DCR will release its 2023 Annual Report. Here’s a sneak peak.
In Other City News
In her first year as Mayor, Mayor Karen Bass made great strides in achieving her goals and creating a better Los Angeles:
Learn more about her accomplishments here:
