City of LA Could Place Cannabis Industry up in Smoke

shutterstock 214618450
shutterstock 214618450

Proposed legal changes to Los Angeles’ cannabis laws have the industry worried that many will have to go out of business or relocate.

Drama over legal cannabis in Los Angeles seems likely to continue for the foreseeable future. The newest draft of Los Angeles’ cannabis regulations has many local business owners worried.

“Currently, the city’s draft cannabis regulations includes language gravely concerning to the city’s patients, businesses, and employees and has the potential of shutting down the entire cannabis industry in LA—the city that has been named the world’s largest cannabis industry market,” the Southern California Coalition said in a statement.


The city is on the verge of approving regulations that could temporarily outlaw all non-retail cannabis businesses in the Los Angeles cannabis industry.

“Only applicants who have been issued a Provisional License or permanent License may
conduct Commercial Cannabis Activity in the City of Los Angeles,” the latest draft of the LA cannabis regulations read.

It appears that Prop D. compliant shops will be the only cannabis businesses to receive provisional licenses. This will allow the 135 Prop D. shops to stay open beyond Jan. 1 but may force cultivators and processors to shut down until they can get a permanent license. Unfortunately, the city is expected to take months to issue permanent licenses. Local cannabis businesses may not be able to simply wait it out and reopen their businesses after being out of operation for months.

A mass shutdown of local businesses will obviously have a significant impact on jobs. It could also interrupt the local supply chain. The Prop. D shops would likely be forced to do businesses with cultivators outside of Los Angeles. These partnerships could put companies outside of Los Angeles at a distinct advantage over local cultivators even once permanent licenses are distributed. Analysts are also expecting a reduction in taxes collected by the city if they prevent dispensaries from doing business with local distributors.

The Prop D. system has come under fire since it was approved in June of 2013. It has prevented new businesses owners from entering the industry and only permits 135 shops to operate. Under Proposition M, which was passed in March, new operators were supposed to be allowed to join the industry.

City Council President Herb Wesson seems to be well aware of the complaints. “I recognize that that’s a flaw. I’m going to address it,” Wesson said at a recent City Council meeting. “We’re just trying to figure out what route we’re going to take to address that.”

Wesson indicated that he is open to the possibility of allowing a grace period for non-retail businesses to stay open while permanent licenses are issued. Ariel Clarke, attorney, and founder of the Los Angeles Cannabis Task Force is already working on presenting a plan to the City Council that would vet already operating cultivators and set them up to receive a provisional license.

Click here for the Revised Draft Requirements for Commercial Cannabis Activity in the City of Los Angeles.