L.A. Moving In on Marijuana Sale Rules

November 22, 2017 by · Leave a Comment 

A Los Angeles City Council committee approved several proposed ordinances and regulations for the cannabis industry Monday in an effort to have all of the city’s policies on the books ahead of the drug becoming legal for recreational purposes on Jan. 1.

The items approved by the Rules, Elections and Intergovernmental Relations Committee outline proposed rules on licensing, operating a cannabis business and where they are allowed to be located.

The proposed regulations also include a procedure for provisional licenses for growers and manufacturers, which was not included in an earlier draft of one of the ordinances but was added by the council last month after some leaders in the industry expressed concern suppliers could be driven out of business because of a possible delay in them getting licensed.

While the city has allowed retail medical marijuana shops to operate in the city for years, it has never expressly allowed cultivators or manufacturers to operate, and this could leave them without a license come Jan. 1 due to an expected delay in the city processing applications without a system for a provisional license.

The proposed regulations also would create a “social equity” program aimed at increasing minority participation in the marijuana industry.

Another amendment that was added in October and approved by the committee would create limitations on how many cannabis businesses could be located in each neighborhood similar to the regulations imposed on the alcohol industry.

Marijuana retailers would also have to be located at least 800 feet from a school, public park, public library, alcoholism or drug abuse recovery or treatment facility, and any other cannabis retailer.

California voters approved the legalization of recreational marijuana last November, effective Jan. 1, 2018.

The legalized industry could fetch the city more than $100 million annually in new tax revenue for a city with a budget that topped $9 billion last fiscal year, and in March city voters approved Measure M, which sets up regulatory measures for the city’s industry.

Once fully implemented, Measure M will replace Proposition D, which was approved in 2013 by city voters and limited the number of dispensaries within Los Angeles city limits to 135 — the number of dispensaries operating before Sept. 14, 2007.

The guidelines forwarded by the committee gives priority licensing to existing shops that received a business tax registration certificate after 2014 and that are operating in compliance with the limited immunity and tax provisions of Proposition D.

They also would create grandfathering provisions allowing existing medical marijuana dispensaries in compliance with Proposition D and up to date on taxes to continue in their current location.

On-site consumption would be allowed by state law starting in 2018, if the local city allows it. City Council President Herb Wesson said previously that concerns over a ban in a draft ordinance of on-site consumption would be addressed later as the city studies the issue.

The committee also added an amendment that would extend the provisions of Proposition D to April 1, 2018, in what Wesson’s spokeswoman Vanessa Rodriguez said was a precautionary measure in case all of the needed regulations are not in place by Jan. 1.

However, the precautionary measure does appear to be just that, as the council is on pace to have all the needed laws and regulations for the industry approved before the new year. The items should come before the council on Nov. 28 for a full discussion and hearing before being voted on in early December, she said.
 

County Working to Shut Down Illegal Marijuana Dispensaries

April 20, 2017 by · Leave a Comment 

Lawyers for Los Angeles County recommended a “surge strategy’’ Tuesday to shut down medical marijuana dispensaries operating illegally in the face of a ban in effect in unincorporated areas.

The county’s legal team told the Board of Supervisors that they had closed 60 dispensaries between 2011-16 and another 31 after the board asked for a crackdown in March 2016.

Enforcement is pending against another 49 dispensaries and lawyers are prepping to force 26 more to close. That would account for all the marijuana retailers identified by the county to date, though new shops continue to pop up.

County counsel estimated that it would take four to six months to close the remaining 75 on the county’s hit list if more county lawyers were hired to team up with the District Attorney’s Office.

“County Counsel and the District Attorney recommend an aggressive, uniform and expeditious enforcement ‘surge strategy’ against illegal MMDs (medical marijuana dispensaries),” lead counsel Mary Wickham wrote in a letter to the board.

Though a county ban on dispensaries has been in place since 2011, enforcing a zero-tolerance policy has proven difficult.

Dispensaries shut down and then open up under different names, creating a game of “whack-a-mole” for enforcement agencies, said Lance Wong, head deputy of the district attorney’s Major Narcotics Division.

The lucrative nature of the business means that entrepreneurs fight hard to keep their dispensaries open, with some filing civil suits against the county. Wong said another problem is that some people mistakenly believe that dispensaries are legal everywhere.

In addition to bringing the hammer down on dispensaries, the county has banned cultivation and distribution of marijuana in unincorporated areas. That ordinance is set to expire in June, but county counsel said it would be rolled into a new regulation.

Landlords are also prohibited by county law from renting to dispensaries.

Supervisor Kathryn Barger said it was tough for landlords to turn down the premiums being offered by some would-be dispensary operators and stressed the importance of educating property owners.

Barger also highlighted public safety concerns that surround dispensaries that operate as all-cash businesses, reminding colleagues of an dispensary employee murdered in her district.

Supervisor Hilda Solis echoed that concern and also worried aloud about dispensaries near schools.

Many residents agreed. “This has to stop. We are overpopulated with these stores. There’s at

least 50 within a five-mile radius,” East Los Angeles resident Jeseus Huertas told the board. “We need some regulations.”

Supervisor Janice Hahn said she’d like to see more enforcement in her district, which stretches along the South Bay and then along the border with Orange County out to Diamond Bar.

“There’s a ban. They’re illegal. They ought to be shut down,” Hahn said.

Recent enforcement has focused on Solis’ First District, which runs from downtown Los Angeles east to Pomona and south to South Gate. Twenty-five of the 31 dispensaries shut down in the last year were in those neighborhoods.

The county crackdown comes as other jurisdictions seek to profit from the statewide legislation of recreational marijuana, approved by voters in November.

Recreational sales will not begin under the new law until January, but some residents and business owners urged the county to focus on licensing and regulating dispensaries rather than banning them.

“If the goal is to maximize the transition from the illicit market to the regulated market, then we should try and figure out how to transition some of these operators,” said Cat Packer, California policy coordinator for the Drug Policy Alliance. “We need a surge of economic opportunities for communities.”

Under the state law, local jurisdictions can only ban commercial activities and outdoor cultivation, something county lawyers are preparing to do.

“Why continue to wage a battle that you obviously are losing?,” resident David Green asked the board. “Almost 60 percent of the voters thought recreational use was fine.”

Other advocates stressed the drug’s medicinal value.

“Cannabis is an exit drug (for me),” said Alexis D’Angelo of Women Grow Los Angeles. D’Angelo called the drug life-saving, telling the board she was able to wean herself off six pharmaceutical drugs and stay away from alcohol by substituting marijuana.

The report by county counsel required no vote by the board and no action was taken.

The county has set up an anonymous tip line, residents can call (213) 974-6453 to report dispensaries.

 

L.A. Ends Tax Licensing of ‘Illegal Pot Shops’

January 21, 2016 by · Leave a Comment 

The city will stop issuing new business tax certificates to medical marijuana dispensaries under an ordinance approved Tuesday by the Los Angeles City Council.

Despite the 2013 voter approval of Proposition D, which banned most medical marijuana businesses in Los Angeles, city finance officials have continued to issue tax certificates and collect taxes from them, illegal or not.

Some medical pot shops in the city are still allowed to operate due to exceptions in Proposition D, but finance officials said they are unequipped to determine whether a medical marijuana dispensary is in compliance and must leave the potentially complex legal question to be sorted out by city attorneys.

City leaders said collecting taxes while also banning medical marijuana businesses sends a mixed message, prompting them to simply cut off the issuance of any new tax registrations.

The ordinance approved by the City Council Tuesday calls for no new tax registration certificates to be issued for “any medical marijuana collective business activity.” The mayor must also sign off on the ordinance before it can go into effect.

Councilman Joe Buscaino said the few pot shops that are allowed under Proposition D had to have already registered by September 2007, so this new ordinance “finally puts an end to the issuance of business tax licenses to illegal pot shops in the city of L.A.”

He said by halting the issuance of new tax certificates to dispensaries, the city will be “inhibiting fraudulent activity” and curbing what appears to be an increase in dispensaries despite the enactment of Proposition D.

Councilman Marqueece Harris-Dawson said a “mix” of illegal and legal pot shops has “hijacked storefronts” in his district for medical marijuana sales.

“This was one of the main issues that came up in almost every neighborhood house meeting,” he said.

Some city officials have accused medical marijuana dispensaries of using the tax certificates to trick landlords and others into thinking they are permitted businesses.

“As much as we try to shut the illegal ones down, they turn around and we issue a BTRC (business tax registration certificate) to them,” City Councilwoman Nury Martinez told City News Service last fall.

The city collected $4.4 million from 447 dispensaries toward the end of last year, even though only an estimated 100 or so dispensaries were thought to be in compliance with Proposition D.

The city collected $5 million in 2014 from 519 tax registration certificate holders that identify themselves as marijuana businesses.

The ordinance adopted Tuesday was based on the idea that any newly registered medical marijuana business could not possibly qualify for the exception in Proposition D, which gives immunity to businesses that can show they registered by a certain date and comply with several other requirements.

The ordinance also makes it a misdemeanor for a business operator to lie on an affidavit attesting that the dispensary complies with Proposition D.

The ordinance makes filling out the affidavits a part of the process of registration renewal, which is done through the annual payment of taxes.

Displaying or maintaining “expired, suspended or otherwise invalid” tax certificates will also be considered a misdemeanor under the ordinance.

City officials are also working to change the color of the tax certificates and include language to make it clearer that such certificates are only for “tax compliance purposes,” according to city attorneys. Efforts are also underway to stop giving medical marijuana businesses the ability to register for tax certificates or file taxes online.

Holding a certificate does not indicate that a business is legal, only that the business has applied to pay taxes to the city. Medical marijuana businesses that are permitted to operate under Proposition D are required to pay business taxes to the city.

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