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Part 1: Los Angeles' Cannabis Rules and Regulations

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April 05, 2018

Los Angeles is further clarifying their cannabis rules, regulations, and city ordinances to surrounding this growing industry. In this series, we’ll be tackling Los Angeles revised planning ordinances and licensing. First up: the city’s rules and regulations for cannabis businesses.

Los Angeles Cannabis Application Procedure

If you’ve applied for a Los Angeles cannabis license, congratulations in taking the first step towards becoming a cannabis business owner.  If you are still looking to apply, read on!

The Department of Cannabis Regulation (DCR) plays a crucial role in cannabis licensing. The DCR provides a master license application form to the public. If you applied, every applicant will be given a time stamp on their application to indicate when it was received. If for some reason the DCR determined your application was incomplete, you will be notified.

If you are applying for the first time, your application should include:

  • Your name
  • The commercial cannabis activity and license type you are applying for
  • Did you apply for an M (medical) type or A (Adult) license type?
  • The date you began/are beginning operations
  • Any license types and/or license numbers issued from the State of California (or any other states in which you have licenses). You must notify the state if you have been denied a license in the past as well.
  • General information about your premise and location. This includes the address, phone number, a diagram of the premise, proof of insurance, security plan, website and district in which the business is located.
  • A summary about how your business will benefit the local economy and community. Share how your business may contribute to job growth or revenue increases for the city.
  • Staffing plans and organizational charts
  • Ensure that no alcohol or tobacco is sold on your premise
  • Include a detailed plan that summarizes how you will meet the requirements for track-and-trace, maintaining inventory, returns, destruction of products, waste management, and maintain accurate records

Click through for a more detailed list of the application requirements. Green Growth CPA is also here to help with the details of your application, so please don’t hesitate to get in touch.

Los Angeles Cannabis: Specific Requirements

There are a few additional requirements you may be required to meet, depending on the type of license you are planning to acquire. Here are a few extra things you should know:

  • If you are a retailer:
    • You must also provide a retailer plan. This plan will discuss how you plan to adhere to the operational requirements around running a retail operation.
  • If you are a delivery business:
    • Provide a delivery plan and a summary about how you plan to meet all operational requirements that the DCR requires.
  • If you are a microbusiness:
    • Provide a specific microbusiness plan and discuss (in detail) how you will meet operational requirements that may include retailers, indoor cultivation, distribution and manufacturing.
  • If you are a cultivation business:
    • Provide a specific cultivation plan and discuss how you plan to meet the operational requirements as required by the DCR. As a cultivator, you are also requirement to provide the city your water source, power source and energy efficiency plan. You must also provide proof that the Fire Department’s Bureau of Fire Prevention and Public Safety has been notified that your cannabis business will be opening in their jurisdiction.
  • If you are a manufacturer:
    • Provide a proposed manufacturing plan and include operational requirements. This plan needs to include detailed descriptions of the manufacturing activity that will be happening on the premise.  These activities could include extraction and infusion methods, the types of products that will be manufactured, etc. Similar to a cultivation business, there must also be proof that you have notified the Fire Department’s Bureau of Fire Prevention and Public Safety alerting them that your business is opening in their jurisdiction.
  • If you are testing commercial cannabis activity:
    • Provide a proposed testing plan including a plan for how you will meet the operational requirements.  You must also provide proof that your facility is ISO 17025 accredited. If you do not have accreditation yet, provide proof that you are going through the proper application steps.
  • If you are a distributor:
    • Provide a specific distribution plan in addition to detailing how you plan to meet all operational requirements.

No matter which license you are applying for, you will be subject to a pre-license inspection.  This will likely include employees or agents from the following city or county departments stopping by for a friendly visit: DCR, Building and Safety, Police Department, Fire Department and Los Angeles County Department of Public Health. Read additional details of the inspection requirements on page eight at the link.

Operational Requirements and Violations

As far as regulation penalties, the city divides violations into minor, moderate and serious offenses. Below is a brief overview of the three categories. These represent a high-level overview of the rules, and if you’d like to read the rules in greater depth, we suggest clicking through to review specific operational violations beginning on page ten.

Minor Offenses

An offense is considered minor if….

  • Agents, officers or other people employed by a licensee do not display a laminated or plastic-coated identification badge.
  • All license, operating conditions and emergency contact info are not displayed.
  • If there is an unfortunate incident and your building is subject to graffiti, it must be removed or painted over within 24 hours. It needs to match the color of the building as well. (Fingers crossed this doesn’t happen to you.)
  • You violate trash pick-up hours. Trash pick-up, compacting, loading, unloading and receiving activities are limited to the hours of 7:00 a.m. to 6:00 p.m. Monday through Friday and 10:00 a.m. to 4:00 p.m. on Saturday. Nothing is stated about Sunday.
  • The outdoor lighting is not shielded and pointing directly onto the site. Your next-door neighbors or public spaces should not be able to see the light source.
  • You use devices like security bars, grates, grills, barricades or barbed wire. DON’T use these security measures.

Moderate Offenses

  • Do not physically change or alter the premise so that it differs from the diagram you provided in your application.
  • Your video surveillance system must have a minimum camera resolution of 1280 * 720 pixels. Each camera shall be permanently mounted in a fixed location. Check page 12 of this document for additional rules for surveillance cameras.
  • Physicians cannot prescribe, recommend or approve medical cannabis on the property
  • No consumption of alcohol or consumption of cannabis allowed on the business premises.  This is a moderate violation.
  • You must hire/contract security personnel for your premise. Security personnel must not be your personal employees.  You must also maintain an alarm system and document it in your security plan.
  • The premise must be properly ventilated. The air will need to be filtered to neutralize any odor from the cannabis.
  • You must notify the DCR within 24 hours if you discover any of the following:
    • A significant discrepancy in inventory
    • Theft, loss, or any other criminal activity
    • A breach of security

Serious Offenses

  • You can only use the business name stated on the license
  • Do not sublet any portion of the premises without written approval from the DCR.
  • You are not required to have your cannabis goods tested until 120 days after the city grants you a license, or April 1, 2018 – whichever is sooner. After that, all cannabis goods shall be tested.

Record Retention

It is your responsibility to maintain the following records for at least seven years.  It is considered a serious violation if you do not!

  • Personnel records – All employee’s names, social security and tax ID numbers. Keep as much as possible around about the employee’s history with your business. This also includes training records.
  • Financial records – including sales receipts, copies of anything to do with taxes and bank statements. Err on the side of caution with this one – more records are better.
  • Keep all of your permits and licenses, and any of the paperwork associated with them.
  • You may be aware of the electronic Track and Trace Systems. This is a way for the state to track and maintain records of cannabis sales. The equipment you have must be able to record business activities, inventory, transactions, etc. so it is compliant with the track and trace regulations.  Examples of electronic equipment may include barcode identifiers, scanning equipment, and cloud-based technology. Read the full requirements on page 17.

The Los Angeles Rules and Regulations are incredibly extensive and although this list goes into great detail, it does not cover them all. Green Growth CPA is here to walk you through the extensive steps in order to secure a license. Contact us today to get started.

Post Tags: Licenses

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