City Hall, faced with a ballot proposition that could override West Hollywood’s cannabis licensing process and a lawsuit from MedMen contesting that process, is proposing that the City Council yield to the demands of the city’s four original medical cannabis retailers.
The proposal follows a series of meetings with representatives of the city’s four original medical cannabis businesses (known as the Originals), who failed to qualify for any of the eight recreational cannabis licenses granted after a lengthy and expensive application process. The Originals are the ones behind a measure proposed for the Nov. 3 ballot that would effectively void the city’s cannabis licensing process.
The compromise also was crafted after meetings with representatives of those who qualified for one of the eight recreational cannabis licenses last year (known as the Adult Use Retailers Association of West Hollywood — AURA), and with some of those who qualified for cannabis consumption lounge licenses.
An item on the City Council’s Monday agenda from the City Manager’s office asks the Council to grant three of the four original medical cannabis retailers the recreation cannabis sales licenses they are seeking. Those retailers are Alternative Herbal Health Services, MedMen, and Zen Healing Collective. The fourth medical cannabis retailer, Los Angeles Patients and Caregivers Group, ranked ninth among the applicants for eight recreational sales licenses. Given that one of the eight businesses that qualified for such a license is not moving forward, the city recommends that LAPCG be granted that license. If approved by the City Council, the number of businesses licensed to sell recreational cannabis would double from eight to 16.
The proposal going before the City Council also asks that those who qualified for one of the eight licenses to operate a lounge where edible cannabis products can be consumed be allowed to include a lounge area where cannabis can be smoked or vaped. If approved, that would potentially add eight more cannabis smoking lounges to the eight already licensed. Those edible and smoking cannabis lounges also would be allowed to sell takeaway products to customers, with limitations on the amount that can be taken away. Some recreational cannabis retailers have opposed that, arguing that allowing takeaways puts the lounges in competition with the retailers.
Another compromise in the proposal would allow those who qualified for one of the eight licenses in five categories (medical, recreational, delivery, edible lounge, smoking lounge) to sell a majority stake in their business, with that stake limited at 51%. A business owner could sell a bigger share if one of the partners in the business dies, becomes disabled, gets divorced or marries or enters a domestic partnership with someone else. After operating for four years, the owner of a business can, with the approval of the city’s Business License Commission, sell 90% of its stake if the proposed compromise is approved by the City Council. However, the three medical cannabis retailers granted permanent medical sales licenses cannot sell more than 25% of their stake in the business until June 30, 2023. That limit then increases to 35% up until Dec. 31, 2027.
The city’s merit-based licensing process in 2018 and 2019 evaluated 300 applicants according to their experience and business plans, and for that reason the city originally had limited the sale of a share of the licensed business to less than 20% to ensure that it continued to be managed by the person who met its licensing qualifications.
The compromise proposal also would require businesses with ten or more employees to enter into contracts with unions. That requirement currently applies only to businesses with 20 or more employees. That change has the support of United Food and Commercial Workers Union Local 770, which has donated $25,000 to the ballot measure campaign.
The proposal recommends measures to appease those cannabis retailers who qualified for licenses in a process some said cost them as much as $100,000 (the application fee was $9,880, but applicants paid prominent community members to side with them so as to validate their claim that they had a connection to the community and also paid lobbyists with an intimate knowledge of city government.) One of those measures is a tax rebate.
“The tax rebates would essentially reduce the city’s cannabis business tax rate of 7.5% for these businesses,” says the proposal being presented to the City Council. “The reduced tax rate for the new adult-use (recreational cannabis) businesses would be 5.25% (a 2.25% reduction) and the reduced tax rate for the full consumption (lounge) areas attached to one of the adult-use businesses would be 6.75% (a 0.75% reduction).”
The city also is proposing that the three original medical cannabis businesses granted the exception that will give them a recreational cannabis license contribute 2.5% of the gross revenue from their sale of recreational cannabis to a fund that will be used to market West Hollywood as a “cannabis destination.”
The compromise measure would extend the deadline by which winners of cannabis licenses must secure approval from the city’s Business License Commission from Feb. 7, 2021, to Feb. 7, 2022. The license holder would be given two years to open its business, with city staff able to grant two six-month extensions to the deadline if the license holder has made substantial progress towards opening.
If approved by the City Council, this compromise proposal is expected to result in the removal from the Nov. 3 ballot of a measure brought forth by three of the four Originals that would effectively void the city’s cannabis licensing process. That proposition would require the city to merge its medical and recreational cannabis license categories. It also would merge licenses for lounges where edible cannabis products can be consumed with those where cannabis can be smoked and vaped. Proponents of that measure already have raised $146,000 to promote it.
The compromise, if adopted by the City Council, also would result in the dismissal of a lawsuit brought in Los Angeles Superior Court in September 2019 by Farmacy Collective, the local entity through which MedMen operates in West Hollywood, that would more or less void the city’s licensing process.
Observing and Participating in the City Council Meeting on Monday
Because of the COVID-19 pandemic, City Council meetings are held virtually. They are broadcast live on WeHoTV and on Spectrum Ch. 10 in West Hollywood. You can also view on YouTube at www.youtube.com/wehotv. WeHoTV programming is also available on multiple streaming platforms, including Android TV, Apple TV, Fire TV, and Roku. Digital streaming platform viewers can find programming by searching for “WeHoTV” within the search functions of these services. WeHoTV and Spectrum Ch. 10 are the only official viewing platforms. The other viewing options and platforms are made available as a courtesy to viewers and their reliability cannot be assured by the city. If you experience technical difficulties while viewing the meeting on one of these platforms, access WeHoTV at the cIty’s website www.weho.org/wehotv, and visit www.weho.org/councilagendas for updated information and assistance on meeting access.
To better facilitate the remote meeting, members of the public who wish to comment on matters before the city council are encouraged to submit a comment using the form located at www.weho.org/councilagendas by no later than 4 p.m. on the City Council meeting day (Aug. 3). Comments received by 4 p.m. will be forwarded to the City Council and posted on the city’s website as part of the official meeting record.
To provide a comment to the City Council by phone, email City Clerk Yvonne Quarker (firstname.lastname@example.org) no later than 4 p.m. on Monday to be added to the public speaker list for the meeting. Include your name, the phone number from which you will be calling, and which item you would like to speak on. Then dial in 10 minutes prior to the start of the meeting (the meeting begins at 5:30 p.m.)You will be placed on hold in the “virtual meeting room” until it is your turn to speak. The number to dial is (669) 900-6833. The meeting I.D. is 924 5164 5768, then #.