After many delays, controversies, and changes to the regulations, Los Angeles is finally opening its second (and last) round of retail licensing.

Based on the timeline laid out by the LA Cannabis Regulations, Retail Round Two will open by early next year. This time around, the Department of Cannabis Regulation (DCR) will use a lottery system. Applicants are expected to register for the lottery within a 30-day time frame before it begins.

When the lottery proceeds, the system will choose registrants at random from the pool. Those chosen will have a year from the date they are notified to complete their applications for Temporary Approval. This timeline lines up neatly with the state’s deadlines for provisional licensing. Local equity applicants with temporary approval have until June 30th, 2023 to apply for a state provisional license, and can renew on a yearly basis until January 1st, 2025.

I know you’re already wondering, so here’s what you need to do to prepare for this round of retail licensing.

1. Obtain social equity eligibility verification (or find a social equity partner)

In order to apply for Retail Round Two, you must qualify as a Social Equity applicant. If you are new to the game, the Social Equity Program aims to “acknowledge and repair” the harm caused by the War on Drugs by leveling the playing field and offering priority licensing to qualified applicants.

DCR opened its application for Social Equity Eligibility Verification on May 26th and will close the application on July 25th.

To qualify, you must submit documentation showing that you satisfy at least two of the following three criteria:

  1. Cannabis arrest or conviction in California for any crime prior to November 8, 2016
  2. 10 years of cumulative residency in a Disproportionately Impacted Area.
  3. Qualify as low income in the 2020 or 2021 calendar year:
    • Meet the low-income thresholds for 2020 or 2021 established by the U.S. Department of Housing and Urban Development.
    • Show that you do not have assets in excess of four times the AMI amount for their household

After the July 25th deadline, DCR will spend 90 days processing the verification applications, until about mid-October.

If you don’t qualify for social equity, consider partnering with someone who does! Just make sure that your social equity partner owns and controls the majority of the business, as required by the LA cannabis regulations.

2. Register for the retail round two lottery

DCR will give applicants who have received Social Equity verification a 30-day window to register for the lottery before it begins. The lottery itself will only take one (1) day, and DCR is supposed to notify the public at least 15 days before it starts. You don’t need property or even a business for this part. The aim of the lottery is to identify social equity applicants for further processing.

The number of applicants chosen for the lottery depends on the number of available licenses. LA regulations limit the number of retail businesses per community plan (e.g. South Los Angeles, Hollywood, etc.). So far, there are about 230 retailers with pre-approval and 200 still waiting for application processing. According to my calculations, there should be a little over 30 available retail licenses in LA. Therefore around 30 registrants will be selected through the lottery.

3. Wait for the results (and maybe try again via PCN)

Once you win this lottery, the real hard work starts: you have a year to submit a completed application for Temporary Approval. This would be a good time to consider seeking the support of one of HB’s highly qualified local cannabis attorneys.

If you aren’t selected, there’s still hope! Some applicants may not complete their applications and DCR may disqualify some applicants. Furthermore, not every community plan will reach its retail license cap. So we may see a second or even third lottery.

Alternatively, if you wish to apply for a retail license in a community plan that has reached its cap, you can file a Public Convenience and Necessity application with DCR and seek the approval of the City Council member for that district.

There’s more to come, so stay tuned to Canna Law Blog for regular updates on Retail Round Two and the future of Los Angeles cannabis licensing.