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L.A. Marijuana Factions Fight Over Their Pot of Gold

| May 24, 2016 | News

by Dennis Romero

A couple things seem clear: The city of Los Angeles needs to fully legalize at least some of the pot shops in town. And people of California are probably going to legalize recreational marijuana come November.
The rest is up in the air.
Los Angeles marijuana interests are battling as we speak over just how this will all shake out. Many want to legalize delivery services and ensure that back-end businesses like cultivators don’t exist in the shadows. But there’s serious disagreement about how many pot shops should exist in L.A.
Legislation signed by Gov. Jerry Brown in December requires medical marijuana dispensaries, delivery services and manufacturers (growers, edible makers) to be licensed by both the state and local governments. Los Angeles voters outlawed pot businesses in 2013 under Proposition D.
But about 135 or fewer medical weed retailers were granted limited legal immunity from prosecution. The gray-area status has worked out alright, but when that legislation, known as the Medical Marijuana Regulation and Safety Act (MMRSA), takes effect in 2018 those retailers will be fully illegal unless they receive city permits, which don’t currently exist.

A bill by area state Assemblyman Reggie Jones-Sawyer would allow the city to keep its Proposition D scheme of quasi-legal shops without having to issue those permits.
Los Angeles City Council President Herb Wesson is proposing that city lawyers look into the possibility of placing a measure on the March 2017 ballot that could create such permits while expanding the legal marijuana business in Los Angeles.
Specifics of what might be on the local ballot have yet to be worked out.
“The city of Los Angeles should explore financial opportunities associated with the recreational use, cultivation, distribution, manufacturing, processing and testing of marijuana,” Wesson’s motion states.
The legalization of delivery services is also on the table, a spokeswoman for Wesson told us.
In November California voters will likely weigh an initiative, the Adult Use of Marijuana Act (AUMA), that seeks to legalize possession of up to one ounce of pot. Doctors’ notes would not be necessary. It would tax sales and regulate marijuana along the lines of MMRSA, giving L.A.’s limited legal immunity shops a clear shot at controlling the recreational market.
A recent analysis by cannabis business data firm New Frontier, in partnership with ArcView Market Research, predicts that legal marijuana sales in California could more than double by 2020 if AUMA passes. Revenues could reach a whopping $6.6 billion.
That’s a lot of green to fight over.
All the factions want to see city permits. Nearly all are open to taking the matter to the voters. Other than that, here’s what each sect in L.A.’s marijuana business community wants:
-GLACA, the Greater Los Angeles Collective Alliance, is perhaps the oldest, most core group representing limited legal immunity dispensaries in town. It was a key player in the passage of Proposition D, which has given its members exclusive access to the legal medical marijuana market.
President and founder, Yami Bolanos, says the organization is open to expanding the number of quasi-legal shops in town on a piecemeal basis to meet the needs of the market. She said the group would like to see legislation that would allow the City Council to expand the number of storefronts occasionally.
“Instead of having to do another initiative again, we’d leave the option open to the city so that when they feel 135 is not enough they can open it up without an initiative process,” Bolanos said.
GLACA wants to legalize delivery services. And, in concert with its sister group the Cultivator Alliance, it wants back-end players like cultivators, manufacturers and edible makers to be legal in town.
“I think it’s time for people to step up and be legal, and for the city to be able to get taxes from all the players,” Bolanos said.
-United Cannabis Business Alliance (UCBA), a new group of about 63 limited legal immunity dispensaries, says it wants to keep the local cap on legit dispensaries at 135.
Harvey Englander of government-relations consulting firm Englander Knabe & Allen, which represents UCBA, said the group is open to allowing new operators into the club when older dispensaries close. For example, the city has said about 125 of the 135 allowed dispensaries are actually operating. Under UCBA’s proposal, 10 news shops would be allowed to open. It’s not clear how they would be chosen.
UCBA would keep delivery services illegal. It’s open, however, to legalized cultivators, manufactures and edible makers, Englander says.
“What it takes is a well regulated industry that makes sure that those dispensaries that have not played by the rules are put out of business,” he said.
-Los Angeles Citizens Task Force on Cannabis Regulation represents both limited legal immunity dispensaries and illegal pot shops, says organizer Ariel Clark, an attorney who has represented marijuana retailers.
She says the group supports “a rational number of storefront retail locations based on the ability to serve patients,” which could be more than 135. It also supports legalized “transportation” (delivery services) and licensing all those other back-end businesses that keep shops stocked.
“Seeing a wonderful new day on a state level with how grateful we are to be regulated,” Clark says, “we want an open dialogue on how we can take an industry that’s thriving and regulate it so that businesses can have clear rules to follow.”
-Illegal dispensaries. Representatives of this group want in. They want to become legit. They want delivery. They want back-end businesses to come out of the shadows.
Attorney Michael S. Chernis represents a few limited legal immunity shops a “bunch” that don’t enjoy such status, he says.
“The stakeholders are basically the haves and have nots,” he says. The haves are the limited legal immunity shops, also known as pre-ICOs for interim control ordinance. That 2007 law drew the line for dispensaries to stay or go. Those that have followed the rules since then have stayed under Proposition D.
“My folks would like an opportunity to get a license in L.A.,” Chernis said. “The marijuana industry is not going away. It’s growing. It’s evolving. The city should evolve with it. We want to rip up the rule book. The rule book is Prop. D.
He makes an argument echoed by others in the business: State legislators intended to open up the business to more minorities when they passed the regulation bills known collectively as MMRSA.
“There’s a racial component to all of this and a civil justice issue to all of this,” the attorney said. “Most of the people who stand to gain the most out of this industry are white, to put it bluntly.”
Orange County attorney Aaron Herzberg of CalCann Holdings invests in marijuana-related enterprises and represents “a small group of people supportive of this concept that L.A. should open up its licensing to a broader group rather than just pre-ICO operators,” he said.
His ideas are resonating in the local dispensary world. Herzberg says he’s been lobbying the City Council to consider legalizing pot shops and expanding the number of storefronts.
“My solution to this is that all the constituencies need to come together and speak to the City Council with a unified voice,” Herzberg says. “We’re actually encouraging the various constituencies to come together with a unified position.”