A Los Angeles City Council committee just approved a preliminary set of controversial cannabis regulations that industry insiders warn could devastate the nascent industry. These municipal regulations outline the licensing process for canna-businesses and set rules for operating hours, record keeping, and security. An earlier version of these regulations was released for public comment over the summer, but the new version includes significant changes that have alarmed industry insiders.
The initial set of regulations included plans to create a registry for any cannabusinesses currently operating in L.A. in order to allow them to continue operating while their official licensing applications are being processed. The new rules have removed this registry, and now warn cannabusinesses that they can be raided and shut down by city police if they are operating without a license. This would force existing businesses to close by January 1st and wait until their licenses are processed before reopening.
“It’s inconceivable how I can shut down my business while waiting for the city to approve my application and also survive,” said business owner Cameron Clarke. Sarah Armstrong, director of industry affairs for advocacy group Americans for Safe Access, argued that a forced shutdown could drive businesses into bankruptcy, which would then jeopardize the supply of medical marijuana for patients.
In a letter to the City Council, Armstrong said that these regulations would have the city “licensing empty shells, which will have no way to service patients and will themselves be forced into involuntary bankruptcy. This means the city has destroyed the cannabis industry before it’s even fully realized.”
However, some industry insiders have advocated in favor of these new regulations. Aaron Herzberg of cannabis real estate and licensing firm Calcann Holdings said that “illegal operators” who have been “exploiting the gray area” in the laws should not get preferential treatment. The total number of municipal licenses in the city is limited, and Herzberg believes that newcomers should have an equal shot at establishing locations.
City Council President Herb Wesson has assured cannabusiness owners that he intends to address the issue before businesses are forced to close. “I realize that that’s a flaw and we’re going to try to deal with it,” he said. “But I’m not going to let one flaw slow down the process.” Wesson added that the council would seek a fair solution for all parties, but that he doesn't currently know what that solution would be.
The proposed regulations will now be voted upon by the full City Council, and will be drafted into law by the city attorney if approved.