FAQ: General Information on Commercial Cannabis Activity

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GENERAL INFO ON COMMERCIAL CANNABIS ACTIVITY

Do I need a license to operate a cannabis business in the City?

Yes. To engage in any type of Commercial Cannabis Activity in the City, a person must obtain a license from both the state and the City.

Which State of California agencies issue licenses for cannabis businesses?

The Bureau of Cannabis Control (BCC) is responsible for licensing retailers, distributors, testing labs and microbusinesses.

The Manufactured Cannabis Safety Branch, a division of the California Department of Public Health (CDPH), is responsible for licensing the manufacturers of manufactured cannabis products.

CalCannabis Cultivation Licensing, a division of the California Department of Food and Agriculture (CDFA), is responsible for licensing cultivators of cannabis.

Which City of Los Angeles agencies issue licenses to cannabis businesses?

DCR is primarily responsible for licensing cannabis businesses in the City. In addition, the Cannabis Regulation Commission issues certain types of cannabis licenses and hears appeals of DCR’s licensing decisions.

Can I operate a cannabis business with only a state or City license?

No. A person must obtain a license from the both the state and the City before operating a cannabis business.

Where can a licensed cannabis businesses be located in the City?

The City’s Commercial Cannabis Activity ordinance (here) specifies the zoning restrictions for each type of Commercial Cannabis Activity as well as the sensitive use and location restrictions that apply to each type of Commercial Cannabis Activity.

Will DCR tell me before I apply whether my proposed business location complies with the zoning, sensitive use and location restrictions?

Currently, DCR does not provide location compliance verifications for potential business locations before the submission of an application. Please refer to the City’s Commercial Cannabis Activity ordinance (here) for the zoning restrictions for each type of Commercial Cannabis Activity as well as the sensitive use and location restrictions that apply to each type of Commercial Cannabis Activity.

Is the City of Los Angeles restricting the number of licenses issued?

The City has set undue concentration limits for the following license types in each of the City’s community plans: ratio of one license per 10,000 residents for Retailer (Type 10); ratio of one license per 7,500 residents for Microbusiness (Type 12); ratio of 1 square foot of cultivated area for every 350 square feet of land zoned M1, M2, M3, MR1, and MR2 with a maximum aggregate of 100,000 square feet of cultivated area and a maximum aggregate number of 15 Licenses at a ratio of one License for every 2,500 square feet of allowable cultivated area for Cultivation (Types 1A, 1C, 2A, 3A, 4 and 5A); and ratio of one license per 7,500 residents for Manufacture (Type 7).

There are no undue concentration limits for Manufacturing (Type 6, N, P, S), Non-storefront Retailer (Type 9), Distributor (Type 11) or Testing (Type 8) licenses.

Additionally, an Applicant is limited to holding up to a maximum of three Retailer licenses and may not obtain licenses to cultivate more than 1.5 acres.

Is the City of Los Angeles prohibiting any types of commercial cannabis activity?

The City will not issue licenses for any type of large cultivation, outdoor cultivation or mixed-light cultivation.

What’s the difference between Temporary Approval and a License?

DCR may issue a temporary license, referred to as Temporary Approval, to eligible applicants, which allows an applicant to legally engage in the Commercial Cannabis Activity for which it has applied for a license. An applicant operating under Temporary Approval is subject to the rules and regulations that apply to annual licensees. Temporary Approval does not create a vested right in the holder to either an extension of the Temporary Approval or to the issuance of a subsequent annual license.

If an Applicant receives Temporary Approval from the City, can it engage in Commercial Cannabis Activity before it gets approval from the State?

An applicant that receives Temporary Approval from DCR still needs to obtain a state annual or temporary license before commencing operations.

How is cannabis taxed?

The State of California imposes a 15 percent excise tax on the purchase of medical and “Adult-Use” cannabis. Cultivators will also have to pay a tax on dry flowers ($9.25 per ounce) and dry leaves ($2.75 per ounce).

The City of Los Angeles imposes the following cannabis business taxes on licensed cannabis businesses:

  • 10% gross receipts from Adult-Use Sales
  • 5% gross receipts from Medical Sales
  • 1% gross receipts from Transportation, Testing or Research, and
  • 2% gross receipts from Manufacturing, Cultivation or other commercialization of cannabis

Where do I submit my application for a City license?

Applications are only accepted electronically through the DCR website. The online application link can be found at cannabis.lacity.org as application phases open.

When will DCR begin accepting applications for licenses?

DCR will accept license applications in three phases:

During Phase 1, DCR accepted applications for Prop M Priority Processing and for Testing licenses. The Phase 1 application window is now closed.

During Phase 2, which is open from August 1, 2018 until 4:00 p.m. on September 13, 2018, DCR will accept applications for priority processing for Non-Retailer Commercial Cannabis Activity. Applicants for this priority processing must meet the eligibility requirements as described in LAMC Section 104.08.

During Phase 3, DCR will accept applications from any person who is eligible to apply for a license. DCR has not yet been determined when Phase 3 will open.

How can I find out more about the licensing process?

In addition to reviewing the Cannabis Procedures ordinance (here) and the Rules and Regulations (here), an applicant may review one of the many informational resources on DCR’s website about the City’s licensing process. These include, but are not limited to:

  • Phase 2 Application Workshop Powerpoints: Part 1 and Part 2
  • Phase 2 Application Workshop Video
  • DCR Presentation to the Cannabis Regulation Commission: here

What information and documents do I need to submit as part of my application?

The application requirements vary based on the application phase and the type of commercial cannabis activity. In general, an applicant will have to provide DCR relevant information and documents about its owners, its proposed business premises, and its proposed operational plans. A detailed description of the the annual license application requirements can be found in Regulation No. 3 of the Rules and Regulations (here). DCR may also request additional documents and information from an applicant as necessary to determine whether an applicant is eligible for priority processing or a license.

Will DCR inspect my business premises during the application process?

Yes. DCR is required to and will inspect an applicant’s business premises before DCR or the Cannabis Regulation Commission issues an annual license. A detailed description of the the pre-license inspection can be found in Regulation No. 5 of the Rules and Regulations (here).

Is there an application manual?

DCR has published an application manual for Phase 2 applicants (here) that explains how to navigate DCR’s online application system. DCR anticipates publishing an application manual for Phase 3 applicants.

How do I find out the status of my application?

DCR will notify you via email, mail or other means when it has an update to provide regarding your application.

Is there a fee to apply for a City license?

Yes, you will be required to pay one or more of the following fees, as follows:
Phase 1 EMMD Retail License Fee - $9,360

Phase 2 License Fee - $11,806
Cannabis License Fee - $8,059
Cannabis LAFD Inspection Fee - $918*
Cannabis License Modification Fee - $1,700

All fees are due within 10 business days after submittal of application.

*LAFD Inspector rate is an additional $216 per hour for inspections exceeding four (4) hours.

Are the license fees refunded if the business is denied a license?

No. DCR does not refund license fees if it denies a license.

How do I withdraw an application?

Please submit a withdrawal request to DCR by email. After review, DCR staff will send an email to the applicant(s) instructing them to visit our office and sign the application withdrawal form. The applicant(s) may schedule an appointment by calling (213) 978-0738. If the application includes more than one owner, individual owners may request different appointment times. Every owner listed on the application must sign the withdrawal form for it to be fully executed.

When will DCR accept applications for testing licenses?

DCR is currently accepting testing license applications.

How do I add a commercial cannabis activity to an already submitted application?

To add an additional activity to an already submitted application, an applicant must submit an email to DCRLicensing@lacity.org requesting the addition of an activity.

How does an applicant demonstrate compliance with the the California Environmental Quality Act (CEQA)?

Please refer to BCC Regulation Section 5010, CDFA Regulation Section 8102, or CDPH Regulation Section 40128 for direction on the CEQA requirements for an application for each type of Commercial Cannabis Activity.

What is an EMMD?

An EMMD means an existing medical marijuana dispensary that is in compliance with all restrictions of Proposition D, notwithstanding those restrictions are or would have been repealed, including, but not limited to, either possessing a 2017 L050 BTRC and current with all City-owed business taxes, or received a BTRC in 2007, registered with the City Clerk by November 13, 2007 (in accordance with the requirements under Interim Control Ordinance 179027), received a L050 BTRC in 2015 or 2016 and submits payment for all City-owed business taxes.

Who is eligible for Phase 2 application processing?

An applicant who meets the following criteria is eligible for Phase 2 processing: 1) the Applicant was engaged prior to January 1, 2016, in the same Non-Retailer Commercial Cannabis Activity that it now seeks a License for; 2) the Applicant provides evidence and attests under penalty of perjury that it was a supplier to an EMMD prior to January 1, 2017; 3) the Business Premises meets all of the land use and sensitive use requirements of Article 5 of Chapter X of this Code; 4) the Applicant passes a pre-license inspection; 5) there are no fire or life safety violations on the Business Premises; 6) the Applicant paid all outstanding City business tax obligations; 7) the Applicant indemnifies the City from any potential liability on a form approved by DCR; 8) the Applicant provides a written attestation that it will enter into an agreement with a testing laboratory for testing of all Cannabis and Cannabis products and attests to testing all of its Cannabis and Cannabis products in accordance with state standards; 9) the Applicant is not engaged in Retailer Commercial Cannabis Activity at the Business Premises; 10) the Applicant attests that it will cease all operations if denied a State license or City License; 11) the Applicant qualifies under the Social Equity Program; and 12) the Applicant attests that it will comply with all operating requirements imposed by DCR and that DCR may immediately suspend or revoke the Temporary Approval if the Applicant fails to abide by any City operating requirement.

How long is Phase 2 open?

DCR accepted Phase 2 applications until 4:00 p.m. on September 13, 2018.

Who has to submit the ownership attestation form for Phase 2 applicants?

Anyone who is considered an Owner of the business that is applying for a license must submit an ownership attestation form.

What documentation is needed to prove eligibility for Phase 2?

Please view these Eligibility Guidelines for more information.DCR may request additional information and documents as necessary to confirm an applicant’s eligibility for Phase 2.

Will Business Tax Registration Certificates (BTRC) be required in Phase 2?

An applicant does not need to possess a BTRC at the time of submitting an application for Phase 2 processing. If you do not have a BTRC, please complete and upload this Placeholder Document with your application.

Can an Applicant with Temporary Approval change the location of its Business Premises?

An applicant with Temporary Approval may not change the location of its Business Premises without approval from DCR. Phase 1 Address Change Service Request Intake Form: This form is used by an EMMD to submit a request to relocate to a new business address in the City. Requests to relocate will be accepted until 4:00 p.m. on Friday, November 30, 2018. DCR requires the following information to process your request:

  1. Your current business address at which you have Temporary Approval;
  2. The new business address at which you are seeking Temporary Approval; and,
  3. A letter of intent from the landlord of the new business address.

The letter of intent must be emailed to DCRLicensing@lacity.org within one hour of submission of this form.

After receipt of this information, DCR will determine whether the new business address complies with the City’s zoning and sensitive use restrictions. If the new business address is compliant, DCR will issue a local authorization letter to allow you to pursue a state temporary license from the state licensing agencies.

If you receive a state temporary license(s) at the new business address, you will not immediately receive Temporary Approval from DCR to operate at that address. DCR will first require that you submit the following information:

  1. Copy of a state temporary license with the new business address;
  2. Statement of Information form from the Secretary of State showing new business address;
  3. Copy of government-issued ID (should match the ID for person who picked up the original L050 BTRC);
  4. Current lease agreement (showing new business address); and,
  5. Previous lease agreement (showing old business address) OR a letter of termination from landlord.

Once DCR confirms that you have submitted all required information, it will issue you a supplemental invoice to take to the Office of Finance, which will process the address change in their system and update your BTRC records to reflect the new business address. At that point, you will receive Temporary Approval from DCR to operate at the new address.

When will pre-licensing inspections for Phase 2 applicants begin?

DCR will contact an applicant to schedule a pre-license inspection. Scheduling will vary based on a number of factors, including the type of Commercial Cannabis Activity, the availability of staff from DCR and other City agencies, and an applicant’s readiness for an inspection.


Does a Phase 2 applicant have to pass a pre-license inspection before receiving Temporary Approval?

Yes. Every Phase 2 applicant must pass a pre-license inspection before receiving Temporary Approval.

As of 11/8/2018, “Phase 2 Priority Processing” applicants who have paid their application fees will have the opportunity to apply for a state temporary license before the end of the year. In the coming weeks, DCR will issue Phase 2 applicants a Local Authorization letter that the state agencies have agreed to accept as sufficient for purposes of the state temporary license application. The Local Authorization letter will allow an applicant to engage in commercial cannabis activities only after satisfying all conditions imposed by DCR, including meeting all eligibility criteria under LAMC Sec. 104.08(a). In other words, an applicant will not be authorized to engage in commercial cannabis activities until DCR determines it is eligible for Phase 2 processing and a Temporary Approval. If DCR ultimately determines that an applicant does not meet all eligibility criteria under LAMC Sec. 104.08(a), it will revoke the applicant’s Local Authorization and notify the state licensing agencies of such.

The Local Authorization does not guarantee that an applicant will qualify for a state temporary or provisional license. Every applicant is solely responsible for submitting all documents and information required by the state licensing agencies in their applications, including evidence that compliance with the California Environmental Quality Act is underway. Lastly, CDFA has asked DCR to remind cultivation applicants that they must submit evidence of enrollment with the applicable Regional Water Quality Control Board or State Water Resources Control Board for water quality protection programs or written verification from the appropriate board that enrollment is not necessary.

Are Microbusiness licenses available during Phase 2?

DCR will not accept applications for Microbusiness (Type 12) licenses during Phase 2, but an applicant may still apply for licenses for multiple types of Commercial Cannabis Activity.

Is the Social Equity Program part of Phase 2?

Yes. To be eligible for Phase 2, an applicant must qualify under the Social Equity Program as Tier 1, Tier 2, or Tier 3 Social Equity Applicant. Please see the Social Equity Program section below for more information about qualifying for the program.