Small-scale caterers and boutique bakers sometimes share the amenities—and costs—of a commercial kitchen to help keep overhead manageable. In California, a new type of business license could allow small-scale and startup cannabis companies to do exactly the same thing.
So-called Type S licenses, issued by the California Department of Public Health, allow small cannabis businesses to operate in co-working spaces rather than requiring each business have its own secure premises. The arrangement can minimize costs on multiple fronts—from rent to equipment and operating expenses—which CDPH says is meant to provide an opportunity for craft manufacturers who may not otherwise have the investment capital to get up and running.
The state opened the application process for Type S licenses on April 13, but for businesses in jurisdictions that don’t offer the associated permit, the opportunity is moot. In Los Angeles, for example, the local Department of Cannabis Regulation doesn’t offer this permit type.
“Shared spaces are particularly important in Los Angeles, where caps, sensitive uses and the withdrawal of available land meant that people would have to share things like commercial kitchens,” Sarah Armstrong, director of industry affairs at Americans For Safe Access, said in an email. Since subleasing is illegal under state and local law, she said, the S license is a “clever way” to allow for flexibility but still maintain regulatory control by the state.
When state regulators released emergency regulations around S licenses in March, Armstrong and other industry advocates took action at the local level, submitting letters to the Los Angeles City Council, the head of the city’s Department of Cannabis Regulation, and others. They asked the city simply to follow the state’s lead.
According to the CDPH, the Type S license category was designed in “response to demand from cities and counties wishing to implement equity programs.” Without S licenses, many in Los Angeles are concerned a key piece of the city’s ambitious social equity program—designed to help make up for the disproportionate consequences of the drug war—will be impossible.
“The way the Social Equity Program is currently structured, established operators are supposed to allocate space in their businesses to social equity applicants,” Armstrong explained. “This requires an S license or something equivalent to it.”
Founder & Interim Editor of L.A. Cannabis News