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Cannabis Businesses Leave Los Angeles Amid A Messy Licensing Process

A worker tends to cannabis plants growing at the Perennial Holistic Wellness Center, a medicinal marijuana dispensary in Los Angeles, California, on March 24, 2017.
(Photo by MARK RALSTON/AFP via Getty Images)

Cannabis companies are leaving Los Angeles amid the city’s slow rollout of cannabis business licenses and industry regulations. Despite the state’s legal adult-use cannabis program beginning on January 1st, by April, the city still hadn’t even begun accepting paperwork for cannabis business applications.

This slow licensing process is a major setback for the city’s cannabis businesses. Without timely approval, these businesses are forced to pay leases on their store locations without making profits. As a result, many businesses have been forced to let go of employees in order to pay their bills. Others have already relocated their businesses to other parts of the state in hopes of gaining licenses in a more timely fashion.

Right now, the state’s Department of Cannabis Regulation (DCR) is exclusively working on issuing Temporary Approval licenses to medical cannabis dispensaries that were established before the state rolled out its recreational cannabis program on January 1st.

As of now, there are only about 146 Los Angeles companies that have Temporary Approval licenses—which allow retailers to sell medical or recreational cannabis products—while thousands more remain unlicensed. Without proper licensing, these businesses risk massive fines that could run up to three times the cost of annual cannabis licenses themselves. According to California’s Bureau of Cannabis Control, these licenses can cost anywhere from $4,000 to $72,000 depending on the business.

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Los Angeles City Council (Photo by Herb J. Wesson Jr. via Facebook)

Cannabis suppliers remain unable to apply for business licenses in Los Angeles, which was supposed to happen before April 1st as part of the DCR’s Phase 2 application processing schedule. The DCR has yet to provide any updates on a new permitting timeline.

Many of the currently licensed cannabis businesses in Los Angeles are vertically integrated, meaning they possess licenses that allow them to function across multiple steps of the supply chain—from cultivation to manufacturing and retail. As a result, large, well-capitalized businesses are able to compete while small businesses are left behind.

To Read The Rest Of This Article By Rob Hoffman on Herb

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Published: May 22, 2018

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