Greetings!
On June 5, 2024, Mayor Karen Bass signed the City of Los Angeles budget for the 2024-2025 fiscal year. Last month, the Budget and Finance Committee voted to include items DCR sought in the City’s Proposed Budget for FY 2024-25: (1) Restoration of a position to support the City’s Cannabis Complaint Portal; and, (2) $1 million for the Social Equity Program. DCR is thankful to Mayor Bass and the City Council for funding the important mission of the Social Equity Program and the work at DCR.
On May 30, 2024, DCR updated its Rules and Regulations for Cannabis Procedures. You can read more about the changes in this news bulletin. One notable change is that retail storefront businesses are now allowed to provide curbside delivery; this does not, however, include pick-up windows or drive-throughs. More information is available below.
In the past weeks, you may have heard the federal government might be rescheduling cannabis from a Schedule 1 to a Schedule 3 drug. While the proposed move may improve access to banking or tax deductions for licensees, it is important to understand that recreational cannabis business activity would still remain federally illegal. Read more about the rescheduling recommendation and how it might affect the cannabis industry in this issue.
For Social Equity Individuals, please note that a new set of webinars are available to you in June. From building your dream team to demystifying the state Annual Licensing process to tips on fundraising, you can find webinar dates below.
Finally, I want to wish our LGBTQIA+ community a happy pride month. Here's to a joyful celebration of love, unity, and resilience, this month and throughout the year.
Sincerely,
Michelle Garakian
Executive Director
Annual License Update
The Cannabis Regulation Commission has heard 91 Annual License Applications and granted 82 of them thus far. Unless a business holds a prior Temporary Approval, Annual Licensees must also receive an Operating Permit to conduct business activity.
To help LA’s retailers, DCR has developed step-by-step guides to get through the City’s Annual Licensing process. Find these here and here.
Please reach out to dcrlicensing@lacity.org with any questions.
Updates to LADCR’s Regulation No. 5 & No. 6
As of May 30, 2024, the Department of Cannabis Regulations updated its Rules and Regulations for Cannabis Procedures.
Specifically, Regulation 5 was changed to:
- Add a Major violation type for relocation modifications performed without DCR approval;
- Allow cannabis and cannabis goods to be displayed in a place where it is visible from outside the Business Premises;
- Allow curbside delivery for retail licensees only; and
- Remove the motor carrier permit requirement for delivery licensees.
Regulation 6 was changed to:
- Require submission of the Successor In Interest Form (LIC-4018-FORM) with each annual renewal, if one has not been submitted or if there is an update;
- Remove the requirement for Storefront Retail Commercial Cannabis Activity (Type 10) Microbusiness with onsite sales (Type 12) to have a County Public Health Emblem Placard to renew for calendar year 2026; and
- Clarify what it means to "cease" commercial cannabis activity pursuant to LAMC Section 104.12(d).
Additionally, all of Regulation 9 was updated based on City Council’s approval of new fee waiver funding. To read the entire Rules and Regulations Procedures for Cannabis Procedures, click here.
In the past month, the Department of Health and Human Services (HHS) recommended to the Drug Enforcement Administration (DEA) that cannabis be rescheduled or reclassified. The announcement garnered a lot of media attention, but what exactly does it mean?
A Quick Recap
The DEA categorizes drugs by schedules, ranked from 1 to 5, with 5 being the lowest (think cough medicine) and 1 the highest (examples here include heroin and LSD). Cannabis is currently classified as a Schedule 1 drug.
The DEA’s move towards reclassification of cannabis would shift cannabis down to a Schedule 3 drug alongside ketamine, anabolic steroids, and testosterone. This would legalize medical cannabis for the first time on the federal level. However, Schedule 3 drugs are still regulated by the DEA, so dispensaries may have to register as pharmacies, although it is too soon to tell. Either way, recreational use and sales of cannabis would remain federally illegal.
What’s Next
Just because the DEA wants to reclassify cannabis, the agency cannot do so unilaterally. The Department of Justice needs to make a recommendation to the White House Office of Management and Budget about the matter. If approved, the DEA will hold a public comment period. Then the DEA will draft a policy that is reviewed by an administrative law judge. This could be a lengthy process, especially if litigation ensues. How long this might take is anyone’s guess.
Impact to DCR and Licensees
This policy change will not have any immediate impact on DCR because recreational cannabis will remain federally illegal. However, there may be several positive impacts for licensees.
- Certain federal criminal penalties based on scheduling could be reduced
- Cannabis growers and sellers could deduct business costs for the purposes of federal income tax filings, which may help profitability
- Medical cannabis consumers could see reduced barriers to federal employment
- Cannabis research will be easier to pursue
On the other hand, cannabis advocates have concerns about rescheduling, namely, that pharmaceutical companies will displace small businesses from the market.
The spring schedule of Social Equity Program’s (SEP) webinars is here! Last month, the SEP team kicked off its webinar series with an overview of the licensing and permits needed to establish a cannabis operation in the City of Los Angeles and provided a comprehensive explanation of the DCR’s annual licensure process.
The DCR has several other webinars planned that will provide opportunities to gain important insights on how to navigate operating a viable cannabis business within the Los Angeles market. If you have questions, be sure to tune in Tuesdays at 6 p.m. The upcoming webinars are as follows:
- June 18: Building the Dream Team
- June 25: Access to Capital & Fundraising
For more information on DCR’s Social Equity Program Business, Licensing, and Compliance Assistance Program, click here.
DCR wants to let the public know about the grand opening of your retail store. Tell DCR about it and it’ll be shared it in our upcoming publications. Email us at cannabisnews@lacity.org
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