Social Equity for Cannabis Business Licensing In LA

Social Equity for Cannabis Business Licensing In LA

Posted by Nancy Moraa on 08/13/2020 in News

Medical content reviewed by Dr. Joseph Rosado, MD, M.B.A, Chief Medical Officer

Social Equity for Cannabis Business Licensing In LA marijuana doctors

The Los Angeles City Council unanimously approved cannabis licensing new rules under the city’s social equity program.  According to a new report by Los Angeles Times, this happened on July 1 amid backlash about the program’s rollout. 

The program’s purpose was to ensure that the people who have been disproportionately affected by prohibition (and cannabis racial profiling) benefit from legalization. The program targets applicants who currently have cannabis-related convictions. More business licenses will be issued fairly to POC (persons of color) who have lived in areas with disproportionate arrests for cannabis crimes. 

Social Equity Changes Ensure People of Color Are Provided Equal Opportunities 

Los Angeles is also making significant changes to the licensing process for the next batch of cannabis dispensaries. During the last licensing round, the Department of Cannabis Regulation planned to issue 100 retail cannabis licenses to social equity applicants. In the process, they would be following a first-come, first-serve process. The first-come, first-serve process also got tainted by controversy. This was when certain stakeholders alleged that some applicants gained early access to the online application system. These early birds got access, but others got locked out because they had slow internet speeds. 

The outcry on the unfair licensing resulted in the suspension of the process. An audit was completed to determine if the city took “reasonable” steps to promote fairness. Efforts by the Los Angeles business licensing authority are structured to be fair.  Still, some applicants emerged and sued the city over what they term a “flawed process.”  Giving some potential cannabis dispensary and ancillary license applicants an unfair advantage. 

Los Angeles Uses a Lottery Method for Cannabis Licensing

The city of Los Angeles now plans to use the lottery system to issue the next round of licenses. This is according to a news report by the Los Angeles Times. All eligible applicants are required to have a California arrest on their records. The applicants must also qualify as low-income. They must also have lived for more than ten years in the city, in a region statistically hardest hit by the war on drugs. And racial bias in arrest for cannabis-related charges. 

The new rules of the city have also clarified the language surrounding how much control a social equity applicant must-have in business to strengthen these requirements. This was to prevent applicants from partnering with wealthy investors, something that raised concerns about predatory agreements. 

Some critics of the lottery system claim that more licenses issued to POC entrepreneurs are the first step to addressing the problem.  Black and brown-skinned prospective business owners can face bias and prejudice in other areas of business.  From commercial lease difficulties, to venture capital investment bias.  It is easier for white entrepreneurs to get started in the cannabis industry.  And some zoning choices also favor middle to upper-class white neighborhoods for dispensary locations.  This diminishes the economic boost that dispensaries and ancillary cannabis services can provide, including well-paying jobs within the medical and recreational marijuana sector. Read: Cannabis Legal Reform Can Positively Impact Black Communities

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