United States: Los Angeles Releases Proposed Commercial Cannabis Regulations

In one of the most significant milestones in the history of marijuana legislation, Los Angeles' City Council recently released its proposed regulations governing commercial cannabis activity in the city. Simultaneously, the Department of City Planning released a draft ordinance proposing land use and sensitive use requirements for commercial cannabis activity in Los Angeles.

The releases mark the next step in the city's effort to create a comprehensive framework for licensing and regulating cannabis businesses in the wake of recent voter-passed marijuana measures. Most notably, Proposition 64, known as the Adult Use of Marijuana Act (previously summarized in this Tracking Cannabis post), was passed by California voters in November 2016, legalizing recreational marijuana. The finalized requirements are expected to have a significant impact on local marijuana regulation throughout the state and across the country as lawmakers turn to Los Angles for guidance in establishing their own regulations.

L.A. City Council: 'We need your help'

The release commenced a 60-day public comment period (ending on Aug. 8, 2017) during which time the City Council will refrain from taking any further action. City councilmembers urged residents, civic organizations and business groups to provide public comments and recommendations to the council. 

"We need your help in coming up with a final version of these requirements and draft ordinance(s)," wrote City Council president Herb J. Wesson, Jr. and three other councilmembers in a letter attached to the proposed regulations, "and we are eager to receive your suggestions."

The public comment period is mandated by Proposition M, which was passed by Los Angeles residents in March 2017 with more than 80 percent voter approval. The measure required City Council to convene public hearings and engage in a robust deliberative process prior to enacting marijuana regulations.

How we got here

In 2013, Los Angeles voters passed Proposition D (also known as the Medical Marijuana Regulation and Taxation Ordinance) which prohibited marijuana businesses in the city but granted to certain qualifying businesses a "limited immunity" from the enforcement of the prohibition. An estimated 135 medical dispensaries qualified for the limited immunity, while hundreds of other businesses opened and operated illegally.

Proposition M repealed Proposition D and authorized the City Council to create a new cannabis regulatory framework. The measure called for the adoption of a "comprehensive regulatory process and structure for all cannabis related activity by Sept. 30, 2017." The proposed rules, released on June 8, 2017, are the most significant step in creating this framework and replacing the much maligned Proposition D. The release was praised by many advocates in the cannabis industry, including Virgil Grant, president and co-founder of the Southern California Coalition, who called it "a positive step towards fully licensing and regulating the cannabis industry in Los Angeles." 

Obtaining a certificate of compliance

Under the proposed framework, to legally conduct and engage in commercial cannabis activity, a business must first apply for and obtain a Certificate of Compliance from the city's Cannabis Commission. Dispensaries operating legally under Proposition D and certain non-retail cannabis businesses are eligible to obtain a provisional certificate to continue operations while applications are being processed and reviewed.

Application requirements include:

  • Disclosing detailed financial information about the applicant business and its owners.
  • Providing a detailed plan for hiring local residents and transitional workers.
    Entering into a labor peace agreement with employees (not required for businesses with fewer than 10 employees).
  • Obtaining a valid state license for Commercial Cannabis Activity.
  • Describing how the business will meet track-and-trace, inventory, and other operational requirements.
  • Providing a proposed community benefits agreement.
  • Submitting to a pre-inspection of the premises, which may include inspection by agents of the Cannabis Department, Department of Building and Safety, Department of City Planning, Police Department, and Fire Department.

Application processing phases

The proposed regulations call for applications to be processed in four phases. Priority is awarded to existing medical marijuana dispensaries that have operated in compliance with Proposition D and to non-retail applicants, such as indoor cultivation businesses and manufacturing businesses that opened prior to Jan. 1, 2016.

Once these applicants are processed, the city will begin to issue Certificates of Compliance to the general public and to applicants under a Social Equity Program. Until the Social Equity Program is fully funded and implemented, as determined by the City Council, the number of certificates issued to the general public cannot exceed the number issued under the Social Equity Program.

The draft regulations provide little guidance on how Social Equity Program eligibility will be determined, other than describing the program's mission and objective:

"[The Social Equity Program will] be based on a social equity analysis aimed at promoting equitable ownership and employment opportunities in the cannabis industry in order to decrease disparities in life outcomes for marginalized communities and to address the disproportionate impacts of the war on drugs in those communities."

Automatic rejection

The draft regulations propose automatically rejecting certain applications, including those submitted by a foreign corporation or by a person employed by an agency that enforces and regulates cannabis. Additionally, individuals convicted for violating any wages or labor laws within the past five years will be automatically rejected.  

Restrictions on retail cannabis businesses

Under the proposed regulations, retail cannabis businesses cannot: 

  • Sell alcohol or allow alcohol or marijuana consumption on the premises.
  • Hold special events or parties on the premises.
  • Provide free samples of cannabis goods.
  • Display cannabis goods in a place visible outside the premises.
  • Operate between the hours of 9 p.m. and 6 a.m.
  • Sell cannabis through exterior openings, such as drive-through or walk-up windows.
  • Provide any form of entertainment other than ambient music (the regulations specifically prohibit cannabis businesses from providing disc jockey, karaoke, dancing and adult entertainment).

Retail cannabis businesses will be required to:

  • Lock all cannabis goods in a locked safe or vault at all times when the business is not open.
  • Limit the amount of goods on display to the average amount of cannabis goods sold by the business during an average one-day period.
  • Follow inventory tracking requirements, including the use of electronic track-and-trace systems and point-of-sale terminals.
  • Maintain records of all financial transactions for seven years.

Delivery regulations

One of the most significant consequences of the proposed framework is the legalization of marijuana delivery in Los Angeles. Until now, the city has prohibited the delivery of marijuana and City Attorney Mike Feuer aggressively pursued delivery businesses, such as Nestdrop and Speed Weed, shutting down the Los Angeles operations of these companies.

The new regulations legalize cannabis delivery by licensed businesses that comply with delivery regulations, such as:

  • Delivery cars must contain a dedicated GPS device (which can't be a phone or tablet).
  • Delivery employees cannot carry more than $3,000 (based on retail price) of cannabis goods at a time.
  • Deliveries cannot be made outside of the boundaries of Los Angeles or to recipients on publicly owned land.
  • Deliveries cannot be made by unmanned vehicles.

Cultivator and manufacturer regulations

The proposed regulations prohibit any business from engaging in outdoor cultivation or mixed light cultivation. Indoor cultivation businesses must comply with environmental rules and limitations on power use, among other requirements.

Manufacturers are prohibited from infusing marijuana into alcoholic beverages or products containing nicotine or caffeine. Cannabis juice, perishable bakery products, canned products, dairy products, meat products and seafood products are all banned as well. The regulations also prohibit manufacturing cannabis products by applying cannabinoid concentrate or extract to commercially available candy or snack food items. 

Under the proposed rules, THC levels in manufactured products cannot exceed 10 mg per serving and 100 mg per package. Manufacturers, like all cannabis businesses, must install air filtration and ventilation systems to neutralize odors so that no odor is present beyond its exterior walls.

Proposed land use ordinance

The Department of City Planning's proposed Commercial Cannabis Location Restriction Ordinance restricts the location of various types of commercial cannabis activity. The ordinance limits the areas where commercial cannabis activity is allowed and requires separation between cannabis retailers and sensitive sites, such as schools, parks and libraries.

According to the Department, one of the purposes of the ordinance is to reduce the negative impacts and secondary effects associated with commercial cannabis activity in Los Angeles, including "neighborhood disruption and intimidation caused in part by increased transient visitors, exposure of school-age children and other sensitive residents to cannabis, cannabis sales to minors, and violent crimes."

The draft rules would restrict dispensary and retailer commercial cannabis activity to primarily commercial and manufacturing zones. Cannabis cultivation, manufacturing, testing and distribution activity would be primarily limited to the city's manufacturing zones. Dispensaries and other retailers cannot, under the proposed ordinance, open within 800 feet of schools, public libraries, parks, drug and alcohol treatment facilities or other cannabis retailers. In connection with the proposed ordinance, the department released maps reflecting the areas in which cannabis retail and manufacturing/cultivation activities will be permitted.

What's at stake?  

As the largest city in California, where the cannabis industry (according to a recent study by the University of California Agricultural Issue Center at UC Davis) is predicted to become a $5 billion industry, Los Angeles has emerged at the forefront of marijuana policy and legislation. As municipalities throughout the state prepare to legalize sales of recreational cannabis under Proposition 64, industry experts predict that other cities in California will look to Los Angeles' regulations as a basis for enacting their own laws. 

Hezekiah Allen, president of the California Growers Association, said "robust local policies in Los Angeles are critical to the success of regulated cannabis in the entire state of California." With Los Angeles' City Council actively seeking public feedback for its proposed regulations, the ongoing public comment period marks a crucial time for the future of marijuana policy and legislation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions