Big shift in store for Los Angeles medical cannabis businesses

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By John Schroyer

Significant changes are on the way for Los Angeles’ sprawling, largely unregulated medical marijuana industry.

City lawmakers are expected to place a measure on the local ballot next year to reform existing rules and create a new regulatory framework for the MMJ industry.

Any regulatory changes also could govern recreational cannabis, if California voters approve adult-use marijuana in November.

Nothing is set in stone. And the Los Angeles City Council could act unilaterally to set up a regulatory system – without asking voters.

But industry observers predict a citywide vote will occur during the first half of 2017. Last Friday, council members were briefed on a report they had requested on their legal options.

Ariel Clark, the chair of the L.A. Cannabis Task Force, a group of industry stakeholders, said the council will probably move forward with a ballot measure for either the March 2017 city election or the May 2017 city election.

The goal: Establish a comprehensive regulatory scheme for the city’s MMJ industry and reform Proposition D, which voters approved in 2013. It grants “limited immunity” to up to 135 dispensaries that comply with specific local laws.

At this point, Clark said, it isn’t clear how any ballot measure would be worded.

During Friday’s City Council meeting, Council President Herb Wesson said he wants to “open a dialogue” with those in the industry to help craft a sensible solution so that good actors can operate legally under state law, according to Clark.

“It was really kind of incredible. Six months ago when we started this task force there was no such dialogue. So I’m quite elated that we now have this open opportunity, and that the city now recognizes this as a legitimate industry,” Clark said. “In fact, Chairman Wesson asked the question, ‘How many dispensaries do you think should be allowed? What number makes sense?'”

Pressure from the state

The city is being forced to act after California lawmakers last September approved statewide regulations governing the state’s medical cannabis industry.

Under the new law – California’s Medical Marijuana Regulation and Safety Act (MMRSA) – plant-touching cannabis businesses will only be legal if they obtain both a local license and a state license. Los Angeles doesn’t have a licensing system for MMJ businesses. There’s only Prop D governing dispensaries.

That’s led to city attorney Mike Feuer to launch a crusade against hundreds of dispensaries that he says are not in compliance with Prop D’s provisions. His office lists more than 400 criminal cases that have been filed.

But city leaders apparently have concluded they won’t be able to control the freewheeling industry, given that many storefront operators will shut down only to reopen in a new location – regardless of whether they’re technically illegal. A spokeswoman for the council did not return repeated calls seeking comment.

While Feuer’s office likes to say he’s shuttered hundreds of MMJ storefronts, plenty remain open.

“I don’t think it’s lost on (the council) that Prop D has been an utter failure, and it’s become a huge problem,” said Michael Chernis, an attorney with the L.A. Cannabis Task Force. “There are dozens, if not hundreds, of dispensaries that are operating that are not strictly legal or without immunity under Prop D.”

L.A.’s options

It’s possible the City Council may decide to act on its own. According to Friday’s City Council report, lawmakers have the power to change Prop D unilaterally. For example, the council could establish a licensing system without a vote. That system could include permitting for dispensaries and other types of plant-touching businesses, such as cultivators and edibles makers.

City lawmakers would have to go to voters if they want to make tax-related changes – for example, if the council wanted to establish a new cannabis taxing system for the industry.

It’s an open question what the council ultimately will do.

Still, Yami Bolanos, the president of the Greater Los Angeles Collective Alliance and operator of the PureLife Alternative Wellness Center, is ecstatic about the council’s recent moves.

“The city is poised to open up. We’ve been asking the city for 10 years to work with us,” Bolanos said. “They were telling us for years that they were waiting for direction from Sacramento, and they have direction now, and we’re very happy that they’re taking it seriously.”

Bolanos is confident the city will adopt a solid licensing scheme for businesses that operate in good faith and abide by the laws.

Further complications

One other wild card remains. Another industry group – the UCBA Trade Association, which is a coalition of dispensaries that have all been open since before September 2007 – wants to get its own ballot measure before city voters for the March election.

The UCBA is working hand-in-hand with a chapter of the United Food and Commercial Workers Union to push a ballot measure that would give dispensaries that are protected under Prop D, which is mostly the UCBA’s 40 or so member dispensaries, the first crack at licensing.

“It’s more of an insurance policy. But we really do believe that the city and UCBA are fairly aligned in that Prop D shops have been open and operating since Sept. 2007, and they should be grandfathered in if they meet certain standards,” Lisa Selan, an attorney for the UCBA, said.

“To what extent the city is going to expand the businesses, we don’t know,” Selan said. “They’d kind of like to keep it to the 135 that were sanctioned by the voters in 2013. But we’re totally open to them opening up to new businesses, including manufacturing, distribution, cultivation, and testing, so more people can come into the industry.”

Regardless of what transpires, it’s certain the Los Angeles MMJ industry will be undergoing radical change in the next year or so.

“Los Angeles as we know it will change, because everybody won’t have to be scared about getting raided,” Bolanos of the Greater Los Angeles Collective Alliance said. “Our day has come.”

John Schroyer can be reached at