Keeping pace with the ever changing state and federal regulations of being a cannabis employer is complicated. A misstep can be financially devastating.

A Compromise for Cannabis from LA City Council.

By Shelby Kier |  August 15, 2020

A Compromise for Cannabis from LA City Council 

California, with legal recreational use of cannabis, has been taking measures to further the industry. Bills including AB 1525 are in the works. Bills like AB 1525 will allow cannabis related businesses to receive services from various financial institutions. In fact, this week, LA city council endorsed a measure that would allow sales licenses to the four original medical cannabis retailers who failed to qualify for them. This will give the 4 retailers licenses to sell recreational cannabis after they failed to gain licensing when previously applying.

The 4 retailers, commonly known as “the Originals” in the area, have had an extensive and expensive battle which was ended this week with the council’s decision. In addition, the battle has brought enough signatures to make a permanent change this election season that would remove the licensing process all together.

With a four to one vote, the measure passed came after City Hall held meetings with staff to develop the compromise with “the Originals” and with AURA (Adult Use Retailers Association). Many compromises were drafted within these meetings and have now been approved in the decision by City Council.

Some of the compromises include lounge areas where cannabis can be smoked or vaped on the premises of the retail space as well as edible consumption. These edible and smoking cannabis lounges will also have takeaway products for their customers but with a limit on that amount to not be in competition with the retailers. No more than five unique products can be taken off site at a cannabis lounge as well as no more than three unused or unopened products.

The compromise requires businesses with ten or more employees to enter into union contracts which would be a change from the current requirement of 20 or more employees. This change has the support of the United Food and Commercial Workers Union Local 770, which has donated $25,000 to the ballot measure campaign. Additionally, the approved measure includes a tax rebate for those who qualified which would reduce the city’s 7.5% cannabis business tax rate to 5.2%.

The compromise means that pending lawsuits against the city will be dropped. The lawsuit that was brought to Los Angeles Superior Court in September 2019 by MedMen, one of “the Originals” would have essentially voided the city’s licensing process. The compromise has now brought the debate to an end with both sides of the argument gaining wins.


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