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(Amended by Ord. No. 185,629, Eff. 7/2/18.)
DCR shall administer the Rules and Regulations as adopted by the City Council. DCR may promulgate and enforce Rules and Regulations related to this article, which shall have the force and effect of law, and may be relied upon by Applicants, Licensees, or other parties to determine their rights and responsibilities. The Commission may recommend to the City Council or DCR amendments to the Rules and Regulations.
(Added by Ord. No. 185,343, Eff. 12/19/17.)
If any section, subsection, subdivision, clause, sentence, phrase or portion of this article is held unconstitutional or invalid or unenforceable by any court or tribunal of competent jurisdiction, the remaining sections, subsections, subdivisions, clauses, sentences, phrases or portions of this measure shall remain in full force and effect, and to this end the provisions of this article are severable. Notwithstanding anything to the contrary in the prior sentence, if any State or City licensure requirement is held unconstitutional or invalid or unenforceable by any court or tribunal of competent jurisdiction, the Commercial Cannabis Activity subject to such licensure requirement shall be prohibited in the City.
(Added by Ord. No. 185,343, Eff. 12/19/17.)
Neither this article, nor any other provision of this Code, or action, failure to act, statement, representation, recognition, certificate, approval, permit or License issued by the City, DCR, the Commission, or their respective representatives, agents, employees, attorneys or assigns, shall create, confer, or convey any vested or nonconforming right or benefit regarding any Commercial Cannabis Activity beyond the period of time and range of activities specifically provided by the licenses issued by the State of California and the City. This article does not create, confer, or convey any right or benefit regarding any activity beyond the lawfulness of any License issued by the City to engage in Commercial Cannabis Activity or any applicable State of California license for such activity. If any City License or any applicable State license is held unconstitutional, invalid or unenforceable for any reason by any court or tribunal of competent jurisdiction, the Commercial Cannabis Activity subject to such license shall be prohibited in the City of Los Angeles and all operations shall immediately cease in the City. The owner of any City License or any applicable State license assumes all risk associated with the validity of such licenses. The owner of any license found to be unconstitutional, invalid or unenforceable and required thereby to cease Commercial Cannabis Activity, shall not be entitled to any compensation from the City based upon such license; the finding that such license is unconstitutional, invalid or unenforceable; or the requirement that any Commercial Cannabis Activity must thereby immediately cease in the City.
(Amended by Ord. No. 186,708, Eff. 8/10/20.)
(a) Application and License Filing Fees. The following fees shall be payable pursuant to Section 104.03 and any other sections specified in accordance with the following schedule:
Type | Fee |
Type | Fee |
Pre-Application Review
(a) | $597 |
Temporary Approval Application
(b) | $5,720 |
Annual License Application
(b) | $7,691 |
$9,360 | |
$11,806 | |
$8,059 | |
$6,969 | |
LAFD Inspection
(a)(d) | Actual Cost |
Annual Primary Personnel LiveScan Review
(c)(e) | $450 |
Primary Personnel Background Review
(a) | $614 |
SEIA
2
Eligibility Verification (Section 104.06.1) | $597 |
(a) Fee is charged per Application.
(b) Fee is charged per Activity.
(c) Fee is charged per Individual.
(d) Fee is based on the actual cost. Cannabis LAFD Inspection Fee shall be based on the current LAFD hourly Inspector Rate, at a four-hour minimum. The Fire Department will invoice the Applicant separately to recover any inspection costs exceeding four hours.
(e) Fee is based on the annual review and assessment of any criminal offender record information on Primary Personnel obtained via LiveScan.
1 SEP - Social Equity Program pursuant to Sec. 104.20.
2 SEIA - Social Equity Individual Applicant pursuant to Sec. 104.20.
(b) License Renewal Fees. The following renewal fees shall be payable pursuant to Section 104.12 in accordance with the following schedule:
Type | Fee |
Temporary Approval Renewal Fee
(b) | $4,233 |
License Renewal
(b) | $8,486 |
SEP
1
License Renewal
(b) | $9,735 |
(b) Fee is charged per Activity.
1 SEP - Social Equity Program pursuant to Sec. 104.20.
(c) Environmental Assessment Fees. For the processing of each initial study prepared or filed in connection with an Application, or for the processing of any supplemental report or for the preparation of a general exemption pursuant to City’s California Environmental Quality Act Guidelines, the following environmental assessment fees shall be payable, pursuant to Sections 104.03(c) and 104.06(e) in accordance with the following schedule:
Type | Fee |
Type | Fee |
Environmental Assessment / Initial Study
(a) | $6,024 |
Addendum prior to Environmental Determination
(a) | $4,137 |
Categorical Exemption | $2,596 |
Mitigated Negative Declaration / Negative Declaration - Expanded Initial Study
(a) | $16,454 |
Environmental Impact Report - Initial Deposit
(a) | $16,454 |
Environmental Analysis Review Services
(a)(d) | Actual Cost |
Publication Fee
(a)(d) | $732 plus Actual Cost
(d) |
(a) Fee is charged per Application.
(d) Fee is based on the actual cost. The Department shall calculate actual costs and the resultant fee in accordance with Section 104.19(j).
(d) Notice Fees. (Amended by Ord. No. 187,095, Eff. 7/1/21.) Notice fees shall be payable pursuant to Section 104.05 in accordance with the following schedule:
Type | Fee |
Written Notice
(a) | $484 |
Mailed Notice
(a)(d) | $1,683 plus Actual Cost
(d) |
Printed Notice
(a) | $484 |
(a) Fee is charged per Application.
(d) Fee is based on the actual cost. In addition to the Department's fee for Mailed Notice, the Applicant shall pay the actual mailing and postage costs directly to the Department's mailing services contractor.
Type | Fee |
Community Meeting
(a) | $986 |
Cannabis Regulation Commission Hearing
(a) | $1,940 |
Appeal to the Cannabis Regulation Commission
(a) | $6,802 |
Appeal to City Council
(a) | $6,210 |
(a) Fee is charged per Application.
(f) Administrative Hearing Appeal Filing Fees. Administrative hearing appeal filing fees shall be payable pursuant to Section 104.14 in accordance with the following schedule:
(g) Public Convenience or Necessity (PCN) Filing Fees. PCN fees shall be payable pursuant to Section 104.03(a)(4) and in accordance with the following schedule:
Type | Fee |
Cannabis Public Convenience or Necessity Filing Fee
(b) | $1,592 |
(b) Fee is charged per Activity.
(h) Modification and Other Filing Fees. Modification and other fees shall be payable pursuant to Section 104.03(e) and in accordance with the following schedule:
Type | Fee |
Type | Fee |
Modification Request Form Review
(f) | $542 |
Business Premises Relocation
(f) | $3,554 |
Business Diagram Modification
(f) | $3,368 |
Ownership Structure Modification
(f) | $2,335 |
SEP
1
Ownership Structure Modification
(f) | $3,870 |
Primary Personnel Background Review
(a) | $614 |
Primary Personnel LiveScan Review
(c) | $450 |
Land-Use Document Review
(f)(g) | $186 |
Dated Radius Map Document Review
(f)(g) | $186 |
Site Plan Document Review
(f)(g) | $123 |
Evidence of Legal Right to Occupy Document Review (f)(g) | $101 |
Executed Lease or Property Deed Document Review (f)(g) | $597 |
Business Premises Diagram Document Review
(f)(g) | $489 |
Business Formation and Organization Document Review (f)(g) | $1,194 |
Organizational Chart Document Review
(f)(g) | $428 |
Ownership Disclosure Form Document Review
(f)(g) | $131 |
History of Denial Document Review
(f)(g) | $244 |
Equity Share Documents / Social Equity Agreement Review (f)(g) | $1,248 |
Indemnification Agreement Document Review
(f)(g) | $56 |
Waste Management Plan Document Review
(f)(g) | $597 |
Certificate of Occupancy Document Review
(f)(g) | $131 |
Commercial Cannabis Activity Plan Document Review (f)(g) | $597 |
Financial Information Document Review Fee
(f)(g) | $624 |
Labor Peace Agreement Document Review
(f)(g) | $131 |
Management Company Agreement Document Review (f)(g) | $597 |
Proof of Bond or Insurance Document Review
(f)(g) | $131 |
Security Plan Document Review
(f)(g) | $597 |
Staffing Plan Document Review
(f)(g) | $597 |
Standard Operating Procedures Document Review
(f)(g) | $1,221 |
Standard Inspection
(h) | $2,468 |
Off-Hours Inspection
(h) | $3,623 |
Extraordinary Projects or Services
(d) | Actual Cost
(d) |
Expedited Services (Time and a Half Rate) | 142.04% of Regular Fee |
Expedited Services (Double Time Rate) | 189.38% of Regular Fee |
(a) Fee is charged per Application.
(c) Fee is charged per Individual.
(d) Fee is based on the actual cost. The Department shall calculate actual costs and the resultant fee in accordance with Section 104.19(j).
(f) Fee is charged per modification request by the Applicant.
(g) Fee is charged for supplemental document review when requested by DCR to assess compliance.
(h) Fee is charged per inspection trip. If the Department determines that, in addition to the routine inspections pursuant to this article or the rules and regulations, additional inspections or abatement actions are required to process an application or enforce compliance with this article or the rules and regulations, the Applicant or Licensee shall pay separate fees for each inspection.
1 SEP - Social Equity Program pursuant to Sec. 104.20.
(i) Fines, Violations, and Non-Compliance Fees(h). Fines, violations, and non-compliance fees shall be payable pursuant to Section 104.13 and the Rules and Regulations in accordance with the following schedule:
Type | Fee |
Type | Fee |
Cannabis Code Violation Inspection | $2,317 |
Cannabis Code Violation Inspection (Off-Hours) | $3,051 |
Cannabis License Non-Compliance Inspection Fee | $4,416 |
Cannabis License Non-Compliance Inspection (Off-Hours) | $5,886 |
Cannabis License Violation Fine - Minor Violation
(i) | $7,004 |
Cannabis License Violation Fine - Moderate Violation
(i) | $21,013 |
Cannabis License Violation Fine - Major Violation
(i) | $42,026 |
(h) Fee is charged per inspection trip. If the Department determines that, in addition to the routine inspections pursuant to this article or the rules and regulations, additional inspections or abatement actions are required to process an application or enforce compliance with this article or the rules and regulations, the Applicant or Licensee shall pay separate fees for each inspection.
(i) Fee is charged per violation.
(j) Actual Cost. In addition to the fees expressly set forth in this article, the Department may negotiate with an Applicant or Licensee (the “Requestor”) for reimbursement of the actual costs associated with the City’s processing of applications, licenses, or related services which requires another City department, a City contractor, or unusually heavy commitments of Department resources. Actual Cost may be charged for Commercial Cannabis Activity services not expressly enumerated in this Article provided the Department and the Requestor agree upon:
(i) The processing services required, including environmental reviews, and the personnel, time and physical resources which the City will need to accomplish those processing services.
(ii) The costs which are to be funded shall consist of the actual costs to the City which include, but are not limited to: wages, including overtime, retirement, compensated time off and other benefits, bureau/divisional overhead, departmental overhead and general City overhead, which are incurred in connection with the employees assigned to perform the processing services for the major project, the direct costs of material and equipment required to furnish the processing services, the reasonable out-of-pocket expenses incurred by any employee assigned to furnish the processing services, and the cost of hiring outside consultants necessary to provide the City with special expertise.
(iii) The Requestor shall deposit funds into the Cannabis Regulation Special Revenue Trust Fund based on the estimated costs of providing the processing services.
(iv) The Department shall promptly advise the Requestor if, at any time during the processing period, the Department believes that the costs of accomplishing the processing services will exceed the estimated costs. The Department and the Requestor shall agree to a procedure for deposit of additional funds if the funds deposited are not adequate to fund the agreed upon processing services.
(v) The Department shall maintain appropriate records of the actual costs of the processing services, prepare a report for the Requestor upon completion of processing services, and refund any unused portion of the deposit to the Requestor.
(vi) Entering into the processing service agreement is voluntary.
(k) Filing Fee Credit. At the discretion of the Department, an Applicant for any determination for which fees are required by this section may be allowed credit for the fees paid upon a reapplication for the same activity under a different application procedure when the Department finds that the Applicant made a good-faith attempt to file the application properly and that the application could be more appropriately approved if filed under a different procedure. (Amended by Ord. No. 187,095, Eff. 7/1/21.)
(l) Refunds. DCR has the sole discretion to consider and approve the issuance of partial or full refunds depending on the actual services performed for the full cost. This subdivision shall not be construed to allow a credit or refund to be given at the Applicant’s option. (Added by Ord. No. 187,095, Eff. 7/1/21.)
(Amended by Ord. No. 186,703, Eff. 7/10/20.)
(a) Program – Original Eligibility Verification. Except for Tier 3 Applicants, as defined in Section 104.20(a)(1)(iv), an Applicant that submitted an Application subject to Section 104.08 by September 13, 2018, or submitted an application for program eligibility verification during the verification period between May 28, 2019, and July 29, 2019, and/or met the criteria in this subsection for a Commercial Cannabis Activity License pursuant to Section 104.06.1(b), shall comply with Section 104.20(a)(2) when a License is issued or renewed. (Amended by Ord. No. 187,095, Eff. 7/1/21.)
1. Social Equity Individual Applicant – Individual Eligibility Verification. An individual subject to this subsection shall be verified as Social Equity Individual Applicant. A Social Equity Individual Applicant may be further verified as a Tier 1 Social Equity Individual Applicant, Tier 2 Social Equity Individual Applicant, or a Tier 3 Applicant in accordance with the definitions and criteria in this subsection.
(i) The following definitions shall apply in this subsection:
(1) “California Cannabis Arrest or Conviction” means an arrest or conviction in California for any crime under the laws of the State of California or the United States relating to the sale, possession, use, manufacture, or cultivation of Cannabis that occurred prior to November 8, 2016. An arrest, prosecution or conviction for a violation of Proposition D, as codified in former Article 5.1 of Chapter IV of the Los Angeles Municipal Code, notwithstanding that Proposition D has been repealed, is not a California Arrest or Cannabis Conviction. A Social Equity Applicant with a California Cannabis Arrest or Conviction shall be ineligible to apply for a License in any of the circumstances specified in Section 104.03(a), subject to the time restrictions therein.
(2) “Disproportionately Impacted Area” means eligible zip codes based on the “More Inclusive Option” as described on page 23 of the “Cannabis Social Equity Analysis Report” commissioned by the City in 2017, and referenced in Regulation No. 13 of the Rules and Regulations, or as established using the same methodology and criteria in a similar analysis provided by an Applicant for an area outside of the City.
(3) “Low-Income” means 80 percent or below of Area Median Income for the City based on the 2016 American Community Survey and updated with each decennial census.
(4) “Tier 1 Social Equity Individual Applicant” is an individual who meets the following criteria at the time of applying for a license: (1) Low-Income and prior California Cannabis Arrest or Conviction; or (2) Low-Income and a minimum of five years’ cumulative residency in a Disproportionately Impacted Area.
(5) “Tier 2 Social Equity Individual Applicant” is an individual who meets the following criteria at time of applying for a license: (1) Low-Income and a minimum of five years’ cumulative residency in a Disproportionately Impacted Area; or (2) a minimum of 10 years’ cumulative residency in a Disproportionately Impacted Area.
(6) “Tier 3 Applicant” is a Person who applied for a Commercial Cannabis Activity License under Section 104.08 and does not meet the criteria of a Tier 1 Social Equity Individual Applicant or Tier 2 Social Equity Individual Applicant.
2. Social Equity Applicant – Entity Eligibility Verification. A Social Equity Applicant shall comply with the Equity Share criteria in this subdivision before a License is issued or renewed. Upon a Social Equity Applicant’s request, DCR may conduct an Equity Share review under this subsection for the Applicant entity prior to the filing of a complete Temporary Approval Application, subject to the payment of the Equity Share Documents / Social Equity Agreement Review Fee pursuant to Section 104.19. This Equity Share review may replace the required Equity Share review during the Temporary Approval Application process, provided that the Social Equity Applicant attests that there are no changes to ownership since the original Equity Share review was conducted and that there are no additional or new agreements that were not previously disclosed to DCR during the original Equity Share review. DCR may conduct a new Equity Share review if there are changes to ownership, operating agreements, bylaws, and/or other agreements or material facts related to compliance with this subsection that were not disclosed during the original review. (Amended by Ord. No. 187,459, Eff. 4/15/22.)
(i) Ownership Percentage. A Tier 1 Social Equity Individual Applicant shall own no less than a 51 percent Equity Share in the Person to whom the License is issued. A Tier 2 Social Equity Individual Applicant shall own no less than a 33 1/3 percent Equity Share in the Person to whom the License issued.
(ii) “Equity Share” means all of the following:
(1) Unconditional ownership of the Equity Share. The Equity Share shall not be subject to conditions precedent, conditions subsequent, executory agreements, voting trusts, restrictions on or assignments of voting. (Amended by Ord. No. 187,095, Eff. 7/1/21.)
(2) Profits, dividends, and distributions. Social Equity Individual Applicants shall receive all of the following:
(A) At least their Equity Share percent of the distribution of profits paid to the owners of the Social Equity Applicant or Licensee;
(B) 100 percent of the value of each share of stock, member interest, partnership interest, or other equivalent owned by them in the event that the stock, member interest, or partnership interest is sold; and
(C) At least their Equity Share percent of the retained earnings of the Social Equity Applicant or Licensee and 100 percent of the unencumbered value of each share of stock, member interest, or partnership interest owned in the event of dissolution of the corporation, limited liability company, or partnership.
(3) Voting rights and control. Social Equity Individual Applicants shall receive the following at all times:
(A) At least their Equity Share percent of the voting rights on all business decisions, including, but not limited to, long-term decisions, daily business operations, retention and supervision of the executive team, managers, and management companies, and the implementation of policies.
(B) The highest officer position in the Social Equity Applicant or Licensee, such as the position of chief executive officer, unless another natural person is appointed to that position by mutual agreement of the parties. (Amended by Ord. No. 187,095, Eff. 7/1/21.)
(4) Successors. The Equity Share shall not be subject to arrangements causing or potentially causing ownership benefits in the Social Equity Applicant or Licensee to go to another in any circumstance other than after death or incapacity. In the case of death or incapacity, a Social Equity Individual Applicant shall identify a natural person(s) as the Social Equity Individual Applicant’s own successor in interest or assignee of their Equity Share. If a Social Equity Individual Applicant dies, the Social Equity Applicant or Licensee will continue to qualify under this section with the requisite Equity Shares so long as the successor in interest of the deceased Social Equity Individual Applicant inherits or otherwise acquires all of such individual’s ownership interest in the Social Equity Applicant or Licensee. The natural person(s) may subsequently identify an entity, such as a trust, to hold the interest. Upon the death of the Social Equity Individual Applicant or Licensee, the Social Equity Applicant shall notify DCR within 30 days of their death. The Social Equity Applicant shall provide a certified copy of the death certificate and update the contact information on file with DCR within 60 days of the death. (Amended by Ord. No. 187,879, Eff. 6/2/23.)
(iii) Additional Equity Share Require- ments.
(1) All Owners shall: (1) comply in all respects with the Equity Share criteria and requirements in this section (“Equity Share Requirements”) in dealings with one another; (2) keep records evidencing their compliance; and (3) on the other party’s reasonable request, provide these records of compliance to the other party.
(2) Any action or inaction taken by a party in violation of the Equity Share Requirements shall entitle the other party to initiate a legal action in the Superior Court of Los Angeles, including, but not limited to, an action for specific performance, declaratory relief, and/or injunctive relief, to enforce the Equity Share Requirements against the other party.
(3) Any annual License(s) issued to a Social Equity Applicant may be suspended or revoked, or a License renewal denied, if it can be shown, by a preponderance of the evidence, that any provision in an operating agreement, contract, business formation document, or any other agreement between Owners of the Social Equity Applicant violates any of the Equity Share Requirements and is not cured within the time allotted by DCR. (Amended by Ord. No. 187,095, Eff. 7/1/21.)
(4) All Owners are required to incorporate the following addendum into operating agreement documents to evidence compliance with Equity Share Requirements: “To the extent that any provision of this agreement, or part thereof, is or may be construed to be inconsistent with or in violation of the “Equity Share” requirements set forth in Los Angeles Municipal Code section 104.20, such provision(s) shall be ineffective, unenforceable, and null and void.”
(b) Program – Expanded Eligibility Verification. An individual seeking to participate in the Social Equity Program shall meet the criteria and requirements in this subsection
1. Social Equity Individual Applicant – Individual Eligibility Verification. An Applicant subject to this subsection shall be verified as a Social Equity Individual Applicant in accordance with the definitions and criteria in this subsection.
(i) “Social Equity Individual Applicant” means an individual who meets two of the following three criteria: (1) Low-Income; (2) a prior California Cannabis Arrest or Conviction; (3) ten years’ cumulative residency in a Disproportionately Impacted Area. For the purposes of Section 104.06.1(c), “Social Equity Individual Applicant” means an individual with a prior California Cannabis Arrest or Conviction and who also meets one of the following two criteria: (1) Low-Income; or (2) ten years’ cumulative residency in a Disproportionately Impacted Area.
(ii) The following definitions shall apply in this subsection:
(1) “Asset” means net assets at, or below, four times the Low-Income thresholds based on Household Size. Examples of liquid accounts that shall be disclosed include but are not limited to, saving accounts, checking accounts, certificates of deposit, money market accounts, stocks, trusts, and gifts. Qualified retirement accounts and an applicant’s primary residence shall be excluded for purposes of the calculation, but other forms of real estate shall be included. Such retirement accounts are limited to accounts that are intended for retirement and that would incur a penalty if withdrawn before a specified retirement age per each account.
(2) “Household Size” means the number of individuals that meet any of the following criteria: (Amended by Ord. No. 187,879, Eff. 6/2/23.)
(A) All spouses or domestic partners must be included in the household and must appear in the submission content.
(B) All household members who are under 18 years of age must be the legal dependent of an adult household member, except in the case of emancipated minors, as claimed on the most recent income tax return, or legal minor children of title holders. All household members who are under 18 years of age must be the legal dependent or emancipated minor of an adult household member, as claimed on the most recent income tax return.
(C) Pregnant Applicants will be counted as two household members only with verifiable medical documentation.
(D) Temporarily absent household members who intend to live in the residence upon return may be considered, if verifiable documen- tation supporting their absence is provided. Such household members include, but are not limited to, household members serving temporarily in the armed forces, or who are temporarily institutionalized.
(E) Neither live-in assistants nor foster children will be counted toward Household Size. Individuals not listed on the Social Equity Individual Applicant’s most recent tax return, such as elderly relatives, live-in assistants, and foster children will not be counted toward Household Size.
(3) “California Cannabis Arrest or Conviction” means an arrest or conviction in California for any crime under the laws of the State of California or the United States relating to the sale, possession, use, manufacture, or cultivation of Cannabis that occurred prior to November 8, 2016. An arrest, prosecution or conviction for a violation of Proposition D, as codified in former Article 5.1 of Chapter IV of the Los Angeles Municipal Code, notwithstanding that Proposition D has been repealed, is not a California Arrest or Cannabis Conviction. A Social Equity Applicant with a California Cannabis Arrest or Conviction shall be ineligible to apply for a License in any of the circumstances specified in Section 104.03(a), subject to the time restrictions therein.
(4) “Disproportionately Impacted Area” means Police Reporting Districts as established in the Expanded Social Equity Analysis, or as established using the same methodology and criteria in a similar analysis provided by an Applicant for an area outside of the City.
(5) “Low-Income” means both of the following definitions are met: (1) the Social Equity Individual Applicant meets the low-income thresholds established in the annual U.S. Department of Housing and Urban Development (HUD) income limits based upon the Area Median Income (AMI) for Los Angeles County based on household size; and (2) the Social Equity Individual Applicant does not have Assets in excess of the amount as defined in this subsection. For the purpose of assessing whether the low-income threshold has been met, DCR shall calculate the Household Size based the criteria in Subsection (b)(1)(ii)(2)(A) through (E).
2. Social Equity Applicant – Entity Eligibility Verification. An Applicant must comply with the Equity Share requirements in this subsection before a License is issued or renewed. Upon a Social Equity Applicant’s request, DCR may conduct an Equity Share review under this subsection for a the Applicant entity prior to the filing of a complete Temporary Approval Application, subject to the payment of the Equity Share Documents / Social Equity Agreement Review Fee pursuant to Section 104.19. This Equity Share review may replace the required Equity Share review during the Temporary Approval Application process, provided that the Social Equity Applicant attests that there are no changes to ownership since the original Equity Share review was conducted and that there are no additional or new agreements that were not previously disclosed to DCR during the original Equity Share review. DCR may conduct a new Equity Share review if there are changes to ownership, operating agreements, bylaws, and/or other agreements or material facts related to compliance with this subsection that were not disclosed during the original review. (Amended by Ord. No. 187,459, Eff. 4/15/22.)
(i) Ownership Percentage. One or more Social Equity Individual Applicants shall own no less than an aggregate 51% Equity Share in the Person to whom the License is issued. A sufficient number of Social Equity Individual Applicants, individually and/or through an entity, shall be disclosed to evidence that the owner(s) of the Applicant or Licensee meets the aggregate 51% Equity Share requirement. Social Equity Individual Applicants with less than a 20% aggregate ownership stake or equity interest in the Applicant or Licensee may be included in the aggregate total. Aggregate means the total ownership interest held individually or through an entity. For example, an individual owning 50% of an entity that owns 50% of a Licensee has a 25% aggregate ownership interest in the Licensee. (Amended by Ord. No. 187,724, Eff. 1/30/23.)
(ii) “Equity Share” is defined in Subsection (a)(2) and incorporated herein by reference.
(iii) Additional Equity Share Requirements in Section 104.20(a)(2)(iii) which are incorporated herein by reference. (Added by Ord. No. 187,095, Eff. 7/1/21.)
(c) Programming – Benefits and Requirements.
1. Programming – Ownership and Disclosure Requirements. Social Equity Applicants shall comply with the requirements in this subsection and in the Rules and Regulations.
(i) Social Equity Applicants may only transfer control or ownership to Persons who meet the same Equity Share requirements, and only upon the prior written approval of DCR. DCR shall promulgate Rules and Regulations for the transfer of control or ownership.
(ii) Social Equity Applicants shall provide to DCR bylaws or operating agreements which specify the percentage of ownership and control by each Person.
(iii) Social Equity Applicants shall disclose to DCR any management or employee staffing agreements it has or will enter into during the period of the License.
(iv) Social Equity Applicants shall disclose any options to purchase equity or control in the Social Equity Applicant.
(v) At the time of requesting an annual license renewal pursuant to Section 104.12, Social Equity Applicants shall provide to DCR a financial statement for its most recently completed fiscal year.
(vi) On or before March 1 of each year, Licensees subject to Section 104.20 shall submit to DCR an annual “Equity Report” signed by all Owners that describes the business plan guidance, services, consulting, training, and/or other technical assistance that encourages and supports the establishment and growth of the Social Equity Licensee, and the estimated dollar value of those services, that were provided by the Owners to the Social Equity Individual Applicant Owner during the past calendar year. As part of the Equity Report, all Owners must execute an affidavit under penalty of perjury confirming compliance with all requirements set forth in Section 104.20, and acknowledging the requirements to disclose agreements about the management, control or direction of the licensed entity, profits, and/or loans. (Added by Ord. No. 187,459, Eff. 4/15/22.)
2. Programming – Workforce Require- ments. Social Equity Applicants and Tier 3 Applicants shall comply with the workforce requirements in this subdivision.
(i) Definitions.
(2) “Transitional Worker” means an individual who, at the time of starting employment at the Business Premises, resides in an Economically Disadvantaged Area or Extremely Economically Disadvantaged Area, as those terms are defined in Section 11.5.6 of this Code, and faces at least two of the following barriers to employment: (1) being homeless; (2) being a custodial single parent; (3) receiving public assistance; (4) lacking a GED or high school diploma; (5) having a criminal record or other involvement with the criminal justice system; (6) suffering from chronic unemployment; (7) emancipated from the foster care system; (8) being a veteran; or (9) over the age of 65 and financially compromised.
(ii) Social Equity Applicants. A Social Equity Individual Applicant shall make a good faith effort to have no less than 50 percent of the weekly hours of the Licensee’s workforce performed by Employees whose primary place of residence is within a 3-mile radius of the Business Premises location. Of those Employees, 20 percent shall be Social Equity Workers and 10 percent shall be Transitional Workers.
(iii) Tier 3 Applicants. A Tier 3 Applicant shall make a good faith effort to have no less than 50% of the weekly hours of the Licensee’s workforce performed by employees whose primary place of residence is within a 3-mile radius of the Business Premises. Of those employees, 30% shall be Social Equity Workers and 10% Transitional Workers. At a minimum, a Licensee is required to contact local community-based organizations, City of Los Angeles Work Source Centers, and other similar organizations to facilitate job outreach, development, and placement services. A Licensee is required to provide a detailed annual report no later than the last day of February that provides evidence of its outreach efforts, including the number of persons interviewed, and details on who was hired to satisfy the good faith requirement. (Amended by Ord. No. 187,879, Eff. 6/2/23.)
3. Programming – Social Equity Agreement Requirements. Tier 3 Applicants shall comply with the requirements in this subsection.
(i) Prior to the issuance of a License, a Tier 3 Applicant shall enter into a Social Equity Agreement with the City to provide to a Social Equity Individual Applicant for a period of three years: (1) Ancillary Business Costs; (2) Property; and (3) Education and Training. Social Equity Agreements shall be processed and approved by DCR.
(1) Ancillary Business Costs. Tier 3 Applicants shall provide security, management, equipment and other ancillary business costs to a Social Equity Individual Applicant.
(2) Education and Training. Tier 3 Applicants shall provide a minimum of 50 hours per year in business development education and training to a Social Equity Individual Applicant. Education and Training provided by Tier 3 Applicants may include: accounting, inventory management, payroll practices, tax preparation, employee recruitment, retention and workforce outreach, or reporting requirements training.
(3) Property – Onsite. Tier 3 Applicants shall provide floor area, at no cost and inclusive of utilities, within their Business Premises location, or at an off-site location, pursuant to Subsection (c)(3)(i)(4), established as a separate Business Premises for a Social Equity Individual Applicant, for a period of three years to engage in a Commercial Cannabis Activity in accordance with Article 5, Chapter X of this Code. The minimum requirements of the floor area provided shall be: (1) Cultivation - minimum 500 square feet or 10 percent of Tier 3 Applicant’s entire Business Premises, whichever is greater; (2) Manufacturing - minimum 800 square feet or 10 percent of Tier 3 Applicant’s entire Business Premises, whichever is greater; (3) Testing - minimum 1,000 square feet or 10 percent of Tier 3 Applicant’s entire Business Premises, whichever is greater; (4) Distributor - minimum 1,000 square feet or 10 percent of Tier 3 Applicant’s entire Business Premises, whichever is greater; (5) Non-storefront retail - minimum 1,000 square feet or 10 percent of Tier 3 Applicant’s entire Business Premises, whichever is greater; (6) Storefront retail - minimum 1,000 square feet or 10 percent of Tier 3 Applicant’s entire Business Premises, whichever is greater.
(4) Property – Off-site. A Tier 3 Applicant shall provide floor area meeting the minimum requirements under Subsection 104.20(c)(3)(i)(3), at no cost and inclusive of utilities, to a Social Equity Individual Applicant at a different off-site Business Premises location in the City, unless property is provided on-site as specified in this section, subject to the following conditions:
(A) The Social Equity Individual Applicant can conduct the Commercial Cannabis Activity for its License type at the off-site location without violating any of the land use or sensitive use requirements in Article 5, Chapter X of this Code.
(B) A Tier 3 Applicant shall be responsible for all costs to bring the off-site location into compliance with all site specific and property related regulations, including, but not limited to, Building Code and Fire Code regulations.
(C) The Social Equity Individual Applicant has the legal right to occupy and use the new location for Commercial Cannabis Activity.
(D) DCR finds that the facilities at the off-site location are substantially similar to the facilities at the Tier 3 Applicant’s Business Premises.
(5) Property Support. In lieu of providing the minimum property requirements in Subsections (c)(3)(i)(3) and (4), a Tier 3 Applicant may provide property support directly to the Social Equity Individual Applicant equal to the greater of the following:
(A) The actual monthly cost per square foot of leased space at the Tier 3 Applicant’s Business Premises multiplied by the amount of space required by this subsection multiplied by 36 months; or
(B) The arithmetic mean of the cost per square foot of leased space for a total of 10 commercial cannabis businesses within a one mile radius, and authorized by DCR for the same Commercial Cannabis Activity, of the Tier 3 Social Equity Applicant’s Business Premises multiplied by the amount of space required by this subsection multiplied by 36 months. If there are less than 10 commercial cannabis businesses within the one mile radius, the radius shall be increased in 100-foot increments until a total of 10 businesses are included.
(6) A Tier 3 Applicant shall provide property support directly to the Social Equity Individual Applicant in one of the following manners: (1) in full upon the first effective day of the Social Equity Agreement; (2) in three equal payments on dates determined by DCR within the first 24 months of the term of the Social Equity Agreement; (3) in 36 equal monthly payments during the term of the Social Equity Agreement; or (4) as agreed upon by the Social Equity Individual Applicant and the Tier 3 Applicant, and approved by DCR.
4. Programming – Benefits. Social Equity Applicants verified in accordance with Subsections (a) and (b) may receive benefits outlined in this subsection. Tier 3 Applicants shall not be processed under this subsection but shall be afforded priority processing as described in Section 104.08.
(i) Processing.
(1) DCR shall process Applications for Social Equity Applicants in accordance with Section 104.06.1.
(2) DCR shall provide priority processing to Social Equity Applicants applying for a Non-Retailer License on a 1:1 ratio with all non-Social Equity Individual Applicants.
(3) DCR shall process Applications or renewals from Social Equity Applicants in accordance with Subsections (a) or (b) before processing an Application or renewal from non-Social Equity Applicants.
(ii) Fee Deferral Program. DCR shall administer the Fee Deferral Program based on requirements and restrictions established in the Rules and Regulations. Participation in the Fee Deferral Program may be subject to the availability of resources.
(iii) Business, Licensing and Compliance Assistance. DCR shall provide Business, Licensing and Compliance Assistance through programming and curriculum development and training in the areas of state and local licensing requirements, commercial cannabis regulations, general business development, cannabis-specific business development and workforce development.
(iv) Financial Grant Program. DCR shall administer the Financial Grant Program based on requirements and restrictions established in the Rules and Regulations. Participation in this Financial Grant Program may be subject to the availability of resources.
(v) Ancillary Business Costs. Social Equity Applicants may receive security, management, equipment and other ancillary business costs provided by a Tier 3 Applicant pursuant to a Social Equity Agreement as defined in Section 104.20(c)(3). Participation may be subject to the availability of resources.
(vi) Education and Training. Social Equity Applicants may receive a minimum of 50 hours per year in business development, education and training provided by a Tier 3 Applicant pursuant to a Social Equity Agreement as defined in Section 104.20(c)(3). Education and training provided by Tier 3 Applicants may include: accounting, inventory management, payroll practices, tax preparation, employee recruitment, retention and workforce outreach, and reporting requirements training. Participation may be subject to the availability of resources.
(vii) Property. Social Equity Applicants may receive Property as specified in Section 104.20(c)(3) provided by a Tier 3 Applicant. Participation may be subject to the availability of resources.
(Amended by Ord. No. 186,703, Eff. 7/10/20.)
(a) A Licensee shall provide to DCR a copy of all written agreements and contracts, including all amendments thereto, with every Management Company that manages Commercial Cannabis Activity on its behalf and all other information and documents DCR requires to determine the nature and scope of a Management Company’s participation in Commercial Cannabis Activity.
(b) DCR may prohibit a Licensee from permitting a Management Company to manage Commercial Cannabis Activity on the Licensee’s behalf if:
2. DCR or another Cannabis licensing authority has determined that the Management Company has failed to comply with State or City operating requirements while managing Commercial Cannabis Activity; or
3. The Management Company cannot manage Commercial Cannabis Activity on behalf of any additional Licensees pursuant to the restrictions set forth in Section 104.21(f).
(c) Every Management Company shall register with DCR pursuant to procedures established by DCR and provide DCR all requested information and documents regarding its participation in Commercial Cannabis Activity in the City.
(d) A Management Company shall not hold an equity interest in a Licensee on whose behalf it manages Commercial Cannabis Activity. Notwithstanding the foregoing restriction, a Management Company may receive a share of a Licensee’s revenues or profits in exchange for management services rendered, subject to limitations established by DCR.
(e) A Management Company shall manage Commercial Cannabis Activity on a Licensee’s behalf in adherence to the operational requirements in this article and the Rules and Regulations that apply to the License type. In construing and enforcing this article and the Rules and Regulations, any act, omission, or failure of a Management Company, including its officers, Employees and agents, shall in every case be deemed the act, omission, or failure of the Licensee.
(f) Every Management Company shall be subject to the following restrictions:
1. Through June 30, 2019, a Management Company shall not manage Commercial Cannabis Activity on behalf of more than three percent of the Licensees in the City engaged in the same type of Commercial Cannabis Activity;
2. From July 1, 2019, through June 30, 2020, a Management Company shall not manage Commercial Cannabis Activity on behalf of more than four percent of the Licensees in the City engaged in the same type of Commercial Cannabis Activity;
3. From July 1, 2020, through June 30, 2021, a Management Company shall not manage Commercial Cannabis Activity on behalf of more than five percent of the Licensees in the City engaged in the same type of Commercial Cannabis Activity;
4. From July 1, 2021, through June 30, 2022, a Management Company shall not manage Commercial Cannabis Activity on behalf of more than six percent of the Licensees in the City engaged in the same type of Commercial Cannabis Activity; and
5. On or after July 1, 2022, a Management Company shall not manage Commercial Cannabis Activity on behalf of more than seven percent of the Licensees in the City engaged in the same type of Commercial Cannabis Activity.
(Amended by Ord. No. 186,703, Eff. 7/10/20.)
(a) DCR shall develop criteria and guidelines for Cannabis Corporate Responsibility Reports (Report). DCR shall post the criteria, guidelines and any amendments on its website.
(b) Prior to the issuance of a License or renewal pursuant to Section 104.12, a Licensee shall submit to DCR a Report that describes the Licensee’s community engagement, corporate philanthropy, relationship with the neighborhood surrounding the Licensee’s Business Premises, and compliance with applicable City and State Cannabis laws and regulations within the previous calendar year. If a Licensee fails to timely submit a Report, DCR may impose administrative penalties or order corrective action as provided in Section 104.13(b). Reports may be publicly disclosed, including but not limited to posting on DCR’s website.
(c) If a Licensee holds Licenses for multiple Business Premises, the Licensee shall submit a separate Report for each Business Premises.
(Amended by Ord. No. 187,562, Eff. 7/6/22.)
(a) Purpose.
1. Unlicensed cannabis businesses threaten the health and safety of cannabis consumers by selling products that are cultivated, manufactured, prepared, and processed outside of the regulated cannabis marketplace. These products are tainted, contaminated, mislabeled, unlabeled, or misbranded, and may cause serious injury or illness if consumed. Unlicensed and unregulated cannabis stores harm the peace, comfort, and welfare of communities and people who live and work nearby. These stores are more likely to operate outside of proscribed hours of operation without meeting locational and operational standards, and are more likely to sell cannabis in quantities that exceed legal limits and sell cannabis to minors in violation of applicable law.
2. Cannabis consumers must be informed whether a retail cannabis business is unlicensed before having to enter the premises and must understand the health risks and consequences of shopping at an unlicensed cannabis business. This knowledge and understanding empowers consumers to make smart choices to protect their health and safety. Communities will also benefit from a reduction in the number of unlicensed cannabis stores.
3. The Emblem Program for Authorized Cannabis Stores (Program) is administered by the County of Los Angeles in partnership with cities within the County of Los Angeles as a cross-jurisdictional effort to deter the operation of unlicensed cannabis businesses. The Program is intended to protect consumers and stop harmful effects caused by unlicensed and unregulated cannabis businesses on local neighborhoods and communities by requiring retail cannabis businesses that have received all appropriate licenses, permits, or authorizations from the State of California and local governments to both display a unique emblem on the Business Premises so that it is highly visible to the public from the exterior of the store.
4. The Program is not intended to promote the use, possession, distribution, manufacturing, sale, or cultivation of cannabis or cannabis products, or to engage in any actions that conflict with any applicable local, state, or federal laws.
(b) Definitions.
1. “Authorized Cannabis Store” means a Licensee engaged in onsite retail sales of medical or adult-use cannabis to customers at a Business Premises location, provided:
(i) The Licensee has obtained a Type 10 (Retailer) or Type 12 (Microbusiness) License or Temporary Approval from the City, and a license or provisional license from the State of California for the same activity or activities;
(ii) The Licensee has obtained all licenses, permits, or authorizations required by the City and any other local agencies necessary to allow the business to engage in the sale of medical or adult-use cannabis; and
(iii) The Licensee keeps all applicable licenses, permits, or authorizations current and valid, and remains in good standing to engage in the sale of medical or adult-use cannabis in the City.
2. “Emblem” means the emblem featured on the Emblem Placard issued to an Authorized Cannabis Store by the Program Administrator as part of the Program.
3. “Emblem Placard” means a placard displaying the Emblem and other required information issued to an Authorized Cannabis Store by the Program Administrator as part of the Program that notifies the public that the store has received all required state and local licenses, permits, or other authorizations to become an Authorized Cannabis Store.
4. “Health Information Advisory” means the pamphlet, paper, or other media provided to the Authorized Cannabis Store by the Program Administrator that contains health information messages, regarding cannabis use and its potential health impacts, created by the Department of Public Health.
5. “Program” means the Emblem Program for Authorized Cannabis Stores.
6. “Program Administrator” means the Director of the Los Angeles County Department of Public Health, or the Director’s designee.
(c) Emblem – Significance. The Emblem, when displayed on the Emblem Placard shall serve as notice to the public that the commercial cannabis business to which the Emblem Placard was issued is an Authorized Cannabis Store at the time of issuance and is in compliance with all applicable public health laws and regulations as determined during the most recent Public Health inspection. The Emblem and Emblem Placard shall not grant any rights or remedies, and shall not be construed as granting any rights or remedies, to any person or entity in possession of the Emblem or Emblem Placard. The Emblem and Emblem Placard may not be sold, assigned, or otherwise transferred, and shall not be removed from the premises of the Authorized Cannabis Store to which the Emblem Placard was issued, except as specified in this ordinance. The Emblem Placard shall not create, confer or convey any vested or nonconforming right or benefit, including the right to engage in Commercial Cannabis Activity, to any Person in possession of the Emblem Placard.
(d) Emblem Placard – Issuance, Posting, Inspection, Suspension, and Revocation.
1. Issuance. The Program Administrator shall cause an Emblem Placard to be issued to all Authorized Cannabis Stores.
2. Posting. The Program Administrator shall cause the Emblem Placard to be posted at the Business Premises so as to be clearly visible to the general public and to patrons entering the Business Premises by posting the Emblem Placard in the front window of the retail business within five (5) feet of the front door, in a display case mounted to the outside front wall of the store within five (5) feet of the front door, or in another location as directed and determined in the discretion of the Program Administrator to ensure proper notice to the general public and to patrons.
(i) An Authorized Cannabis Store shall, at its sole cost, make any reasonable modifications to the exterior or interior of its Business Premises that the Program Administrator determines are necessary to accommodate the posting of the Emblem Placard, including, but not limited to, modifications to lighting, window treatments, coverings, tinting, glazing, and painting, and the mounting of a display case on the exterior of the Business Premises.
(ii) An Authorized Cannabis Store shall not alter, move, remove, or otherwise modify an Emblem Placard posted at its Business Premises pursuant to this section unless ordered or authorized to do so in writing by the Program Administrator.
3. Inspection. Not less than once per year, the Program Administrator shall cause an inspection to take place at the premises of an Authorized Cannabis Store to ensure the Emblem Placard is displayed and the Health Information Advisory is provided or made accessible to consumers in compliance with the provisions of this ordinance. Inspections shall take place during ordinary business hours and may be unannounced. The Program Administrator may conduct an inspection more than once per year if the Program Administrator determines more frequent inspections are necessary to ensure compliance with the Program. Inspections may be conducted in conjunction with or separately from other regular inspections.
4. Suspension. Upon a determination by the Program Administrator that a Licensee ceases to keep all applicable licenses, permits, or authorizations current, valid, and in good standing, the Program Administrator may immediately suspend the Licensee’s participation in the Program. Written notice will be provided to the Licensee detailing the reason for the suspension, along with instructions for reinstatement. The Emblem Placard will be removed by the Program Administrator, or an authorized representative, until the Licensee takes the necessary steps for reinstatement into the Program.
5. Revocation. Upon a determination by the Program Administrator that a Licensee ceases to be an Authorized Cannabis Store for any reason, the Program Administrator shall immediately issue an order in writing to the store to remove the Emblem Placard from public view and return the Emblem Placard to the Program Administrator, or provide other evidence satisfactory to the Program Administrator that the Emblem Placard has been destroyed. The Program Administrator’s determination shall be final and not subject to appeal. If an Authorized Cannabis Store’s Temporary Approval or License is revoked, suspended, canceled, or not renewed, the Licensee shall immediately remove the Emblem Placard from public view.
(e) Health Information Advisory. An Authorized Cannabis Store, at the direction of the Program Administrator, shall provide or make accessible to the consumer a Health Information Advisory created by the Los Angeles County Department of Public Health. The Health Information Advisory shall be supplied by the Program Administrator. An Authorized Cannabis Store shall provide the Health Information Advisory to the consumer at the point of sale. The Program Administrator may also supply Health Information Advisory materials in pamphlet or other written form to an Authorized Cannabis Store, and require those materials be displayed and made accessible to consumers.
(f) Violations.
1. It shall be unlawful for any person to engage in the retail sale of medical or adult-use cannabis or cannabis products in the City unless it is an Authorized Cannabis Store and displays an Emblem Placard in compliance with the provisions of this ordinance.
2. Notwithstanding the requirement in Subdivision 1., a Business Premises with a License or Temporary Approval to conduct Storefront Retail Commercial Cannabis Activity may operate without an Emblem Placard until January 1, 2025.
3. It shall be a misdemeanor and an unfair business practice subject to criminal and civil enforcement to display or use the Emblem or Emblem Placard, or any placard, symbol, or rendering that is substantially or confusingly similar to the Emblem or Emblem Placard, in connection with any commercial cannabis activity for the purpose of falsely holding oneself out as an Authorized Cannabis Store.
4. City and the Program Administrator may conduct inspections of any commercial cannabis business displaying the Emblem or Emblem Placard, or a substantially or confusingly similar Emblem or Emblem Placard, on its premises, for the purposes of determining whether the store is an Authorized Cannabis Store.
5. Where City and County laws conflict, commercial cannabis businesses shall comply with all City laws, rules, and regulations unless the issue directly relates to matters of public health that are regulated by the County pursuant to this Program.
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