Effective September 26, 2022, the Department of Cannabis Regulation (DCR) updated its Rules and Regulations. One significant aspect of these updates is the incorporation of the new Legal Business Entity Record process into the pre-application phase of the licensing process. Another component is that DCR has clarified the regulations for delivery operations, including the vehicle registration process and the new Delivery Vehicle Placard (DVP) requirement. Lastly, a new Regulation (Number 11) was added to outline the SEED Rental Grant Program for Social Equity Individual Applicants. Below is a detailed, non-exhaustive summary of the changes to DCR’s Rules and Regulations.

Regulation 2 – Licenses

• DCR will not authorize temporary events in LA City
  • Also mentioned in Regulation 5, Section (C)(13)(vi)
• Licensees shall engage only in the Commercial Cannabis Activity(ies) for which a License has been issued and only at the Business Premises location for that License.
• DCR may suspend or revoke a license(s) if it determines that a Licensee is conducting unlicensed Commercial Cannabis Activity.

Regulation 3 – Application Procedure

• Pre-Application
  • This process now requires a BTRC number, and then creation of a legal entity record, before the pre-app record can be submitted
• Temporary Approval and Mods
  • Applicant must submit any modification requests within 60 days of submitting the TA application. DCR then has 30 days to review the request
  • 4003, 4004, and 4008 no longer required in the TA app
  • Applicant required to prepare CEQA document only if they do not qualify for categorical exemption
  • LA County Public Health Permit is required for 2024 renewal (and thereafter)
• Entity Substitution
  • DCR may require Applicant to submit a new pre-app record after approval of an entity substitution approval. This will be used to determine location compliance with sensitive use distances as of that quarter.
• If an applicant/licensee loses control of premises, they must submit a surrender form within 10 days, and the record is subject to abandonment

Regulation 5 – Operational Requirements and Violations

• General Operations
  • Licensees must notify DCR of the date operations commence within 30 days of commencement
  • All employees at the business premises must be at least 21 years of age
  • All licensees must sign and submit Licensee Attestation: Operational Regulations (ENF- 3003-FORM) within 30 of the beginning of operations [This form does not yet appear to be available on DCR’s website].
  • Licensees must have a code of conduct, applicable for both employees and patrons. It must be publicly displayed on the premises
• A Licensee shall request approval for any change to the activity type (e.g. removal, cancellation, expansion)
• Delivery general updates
  • Delivery employees must wear and display a badge at all times, which must include (among other things) the DCR license number
  • Delivery employee no longer required to carry copies of the license or gov’t ID (formerly section (D)(6)). Presumably because the employee badge will now have the license number
  • Delivery licensee must retain a copy of each signed delivery request receipt (can be maintained electronically)
  • Delivery licensee must provide a copy of age verification device specifications to DCR within 30 days of licensure but prior to any deliveries
  • DCR removed the section prohibiting public markings/indications that a delivery vehicle is carrying cannabis. Previously Section (D)(13)
• Delivery Vehicle Placard (DVP)
  • Licensee must register all vehicles (submitting vehicle’s make, model, VIN, etc.) within 30 days of delivery license issuance. DCR shall also issue a DVP for each vehicle, which must be received before any deliveries are made
  • DVPs must be displayed in the vehicle at all times
  • DVPs are reissued upon license renewal
  • The Licensee shall notify DCR via email at DCRcompliance@lacity.org when a new vehicle is added to or removed from the fleet. The Licensee shall return any and all DVPs for vehicles which have been removed from the fleet.
  • Delivery vehicles are subject to inspection by the DCR or LAPD at the Business Premises or during delivery

Regulation 7 – Administrative Violations, Penalties and Appeals

• DCR may issue a Notice to Correct instead of the Notice of Violation
  • Regulations do not specify a process to appeal or request an extension for these Notices
  • Failure to respond may result in a Notice of Violation
• Applicants cannot submit modification or withdrawal requests while a Notice of Violation is
  open

Regulation 8 – Social Equity Program

• “Disproportionately Impacted Area” has been redefined. It is no longer the Police Reporting
  Districts with high number of cannabis arrests and a high percentage of low-income households.
  Now, it is the Police Reporting Districts established by the Expanded Social Equity Analysis (link
  here) from June 16, 2020. The new regulations include a list of all eligible districts.

Regulation 11 – SEED Rental Grant Program

• DCR has created the Social Equity Entrepreneur Development Rental Assistance Grant Program
  (“SEED Rental Grant Program”), which is a financial grant program for Social Equity Individual
  Applicants. These funds are provided by the California Governor’s Office of Business and
  Economic Development.
• Up to $4 million is available in grant funds. Each eligible Applicants and Licensees can apply to
  receive $50,000 in three disbursements.
• $1 million is available in grant funds. Each eligible Applicants and Licensees can apply to receive
  $10,000 in a single disbursement.
• DCR shall accept applications for funds beginning September 30, 2022, until March 30, 2023.
  Funds shall be disbursed on a first come, first served basis.

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  If you have any questions about any of the above, please feel free to contact Katchko, Vitiello & Karikomi, PC for more information and a member of the team will be happy to assist.

  By Christopher Peel, September 28, 2022.