Turmoil abounds over Los Angeles’ latest marijuana business licensing and its social equity program

Los Angeles’ latest marijuana business licensing round – which opened last month and has yet to award any retail permits – has many hopeful applicants outraged and threatening to take drastic action if major changes aren’t made.

Hundreds reportedly appeared Thursday for the city’s Cannabis Regulation Commission meeting, where allegations of corruption, incompetence, and basic unfairness were leveled at city officials, including Cat Packer, the head of the L.A. Department of Cannabis Regulation (DCR). Packer defended the agency.

The California Minority Alliance in recent weeks has circulated evidence it says shows the licensing system was compromised. At least two applicants were able to enter the software application filing system before 10 a.m. on Sept. 3, when the licensing round began, the DCR confirmed Thursday.

The situation has fueled frustration over the licensing process. If left unchanged by the City Council, regulators will award only 100 MJ retail licenses to the first 100 applicants who last month filed their documents with the DCR, which received a total of 802 applications.

So far, a DCR spokeswoman confirmed Friday, the agency has invoiced approximately 40 of the top 100 applicants. Of those, 18 have paid fees and moved on to the next licensing step.

Any applicant that receives an invoice has 10 days to pay the fees. The DCR will be invoicing all qualified applicants within the next two weeks.

Moreover, specific components of the licensing program are drawing widespread criticism.

Social equity applicants, for example, are demanding the licensing process be started over. Alternatively, they want the number of licenses increased to ensure the social equity program serves the African-American community.

“This whole process has been grossly abused,” one social equity applicant told the commission.

Another added: “There should definitely be more than 100 licenses allowed in the first round. It’s social equity, not corporate equity.”

Yet another urged the commission: “We should just scrap the whole thing and start over.”

Armenian applicants

Virgil Grant, a longtime L.A. marijuana businessman who was one of the earliest proponents of social equity, criticized the licensing process for allowing Armenian residents to get in front of local African-American residents for the coveted 100 MJ retail permits.

“As long as I’ve lived here, I never met one Armenian” in Compton, where Grant has lived most of his life, he said. “How is it that a majority of the first 100 names are Armenian?”

Grant’s comments spoke to a suspicion held by many stakeholders that automated online bots were used by some applicants to file multiple applications quickly on Sept. 3, arguably breaking the rules and giving them an advantage over other social equity participants.

“If they don’t change it, it will be burnt down,” Donnie Anderson, a co-founder of the California Minority Alliance, told Marijuana Business Daily after the commission hearing.

“The people of South Los Angeles will not be victimized again. The revolution will be televised,” Anderson said. “I’m a nonviolent person, 100%. But when you leave people in desperate situations … desperate things happen.”

Officials say process worked

Packer, however, defended the licensing process during a report to the commission, adding that “the system itself operated as planned.”

Packer noted a DCR analysis showed two applicants were able to access the system before 10 a.m. Sept. 3 because of a loophole: The pair had asked to have their passwords reset.

But, Packer said, those two were pushed back in line for the licenses to reflect a start time of 10 a.m. Their resulting places in line for licenses put them at Nos. 59 and 182, respectively.

Packer said that within the first three minutes after the 10 a.m. start, a whopping 338 applications had already been submitted, and the average time it took for the first 100 submissions was 71 seconds.

During a test run, a DCR staffer was even able to upload all the required documents for an application in just 38 seconds, she said.

Packer began her statement to the commission by inviting any stakeholder to file an ethics claim with the city. Packer added that “no data or evidence … suggest that nonhuman systems were utilized” to file applications.

Packer did acknowledge, however, that applicants with slower internet connections may have been at a disadvantage, given how quickly the line moved on Sept. 3.

“The truth of the matter is that if an individual applicant had a slow connection speed … that is something that would not be accounted for in our system,” Packer said.

Concern from overseers

Packer also faced skeptical commission members alongside angry residents.

“They’re being set up to fail,” Commissioner Thryeris Mason said of many social equity applicants, referring to how it will still likely be months before any of the newest 100 licensees can open their stores.

Mason suggested the city change course to offer some type of temporary approval for retail licenses – a suggestion Packer agreed with – since, under the current plan, the 100 new shops must get full annual permits before being allowed to begin sales.

A DCR spokeswoman wrote in an email to MJBizDaily that Packer and her agency “take community concerns VERY seriously,” and pledged to “proactively seek… feedback from the community” for further policy recommendations to the city council.

Commission President Robert Ahn echoed Mason and said he’s heard from many social equity applicants that they’ve already been paying rent on store locations for months while waiting for the licensing process to play out, leaving many in dire financial straits.

“It’s like before they get out of the gate, it’s insurmountable odds already,” Ahn said. “What do we do about folks that are sitting on leases?”

No answers were to be had to such questions Thursday, however. That will be left to the City Council in coming weeks, and it’s anyone’s guess as to what the council will do about the situation.

John Schroyer can be reached at [email protected]

9 comments on “Turmoil abounds over Los Angeles’ latest marijuana business licensing and its social equity program
  1. brk on

    DCR confirms that applicants were able to submit there applications before 10 AM. Then fabricated a timestamp and reference number. DCR then defends application process and says everything went smoothly. Doesn’t make any sense. Has the application company been contacted? They should release information publicly ASAP.

    Reply
  2. Pat on

    Without having read anything of the substance of this article at all; and just going by its title, I think I can reasonably address this concern: Don’t get caught up in it, you prospective “social equity” applicants. Stay doing what you have been doing if you’ve been doing it the 215/420 way and using safe practices along the way. Why? There have been absolutely no studies of any worth, whose conclusions reveal that conducting your business in the aforementioned as stated above is in any significant way better/safer to such a degree that one needs to be subjected to the circus of TRYING to obtain a license; according to made up standards that have no basis in rationality. The basis of all these hoops is: A screening tool, to keep the spigot open just enough to meet an artificially imposed supply/demand graph that meets the “new cartels'” price points. Real, substantive and thorough studies would poke holes in all of it. That’s why they haven’t been conducted.

    The people that hatched all of this, USED to be among the 215/420 crowd; but then quietly moved to the other side without letting on, because their full intention was to take the business away from everyone else whom was doing it the same or better than them. All the while, pretending to be their friend….This small group colluded with the power brokers to get what they wanted. So, the horse is out of the “licensing” barn. Anyone whom dares go into that barn now, and expects to get out the other side looking good, is out their minds. It will be more like going through a real life haunted house where both Jason and Freddie Krugger await you. And you all know what happened to those people.. If one of them doesn’t get you going in, the other one will.

    Reply
  3. Demitri downing on

    In working in and studying cannabis Industry and policy for the last seven years and three months it is clear that whatever social equity social justice system is designed and implemented, it will be abused to some degree if not entirely, which is entirely unfortunate because the objectives are Noble and righteous in their intent. History shows this as we found this to be true with affirmative action from the 80s. Furthermore the most disenfranchised of the disenfranchised I called them the small farmers in the world do not have Internet access do not have the literary competence to file complicated paperwork most the time and the money to back themselves up while inevitably big business ““ will dominate almost any sector it would be nice if the cannabis advocates realized that the only way to allow the poorest of the poor to at least have a fair start would be to liberalize the cannabis markets to the point where someone with no means And just a seed could participate .

    Reply
    • FakeJack on

      I agree, anybody with a SEED, and a flower pot should be allowed. Also anyone with a prior MJ conviction should be at the top of the list. That would truly be social justice.

      Reply

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