Los Angeles Department of Cannabis Regulation (“DCR”) Changes You Need to Know

This entry was posted on Friday, August 27th, 2021 and is filed under Cannabis Law.

The Los Angeles Department of Cannabis Regulation (“DCR”) has announced a number of changes to the processing of applications and licenses within the city of Los Angeles at the Cannabis Regulation Commission hearing held on August 19, 2021. The recording of the August 19 hearing can be found here. Below is a summary of the key points discussed during the hearing that KVK clients should be aware of.

Sensitive Uses

In the recent Amendments to Article 5 of Chapter X of the Los Angeles Municipal Code related to licensing and land use restrictions, DCR clarified how to measure the distance between a Commercial Cannabis Activity business (“CCA Business”) and a Sensitive Use. 

“The distance between any CCA Business, and any Sensitive Use with exclusive use of the parcel upon which it is located, shall be … from the closest exterior wall of the CCA Business to the closest parcel boundary of the Sensitive Use.” 

“The distance between any CCA Business and any Sensitive Use without exclusive control of the parcel upon which it is located, shall be … from the closest exterior wall of the CCA Business to the closest exterior wall or fence under the control of the Sensitive Use, excluding parking lots.” 

DCR pulls the Sensitive Use data information on February 1, May 1, August 1 and November 1 – or on the first business day immediately following the start of each quarter. These “Verification Dates” shall be used for determining compliance with Sensitive Uses for applicants and licensees.

Pre-Applications

The portal to submit pre-application portal will reopen for new applications on October 1. Pre-applications are currently limited to social equity delivery, distribution and manufacturing applications. DCR has not provided any time frame updates on when they plan to open the Phase 3 Round 2 verification or application process. 

When the pre-application process reopens, the process will be different than what has previously been required. Submission of ownership structure forms, owner attestations, lease, diagrams, etc. will no longer be required for the pre application. Instead, DCR will focus on determining if the location is eligible for commercial cannabis activity as it relates to the sensitive use restrictions. Applicants will be required to provide (1) a notarized landowner attestation acknowledging that commercial cannabis activities will occur at the premises and (2) a notarized attestation confirming the applicant will comply with DCR regulations, will not commit illegal operations, etc. The anticipated processing time for the pre-applications is 30 days. If the location is deemed eligible, then the complete Temporary Approval application must be submitted within 60 days.

Temporary Approval

The Temporary Approval application process no longer requires submission of the following: state license, fire inspection, staffing plan, standard operating procedures, security plan, radius map attestation. For clarification, these documents are still required to be submitted for the annual application. A complete Temporary Approval application, including all required forms, documents, and fees, must be submitted to DCR before DCR will review the application. Upon submission of a complete application, the estimated processing time for the Temporary Approval application is 90 days from the application date, defined as the day which all required fees have been paid.

Local Compliance Underway

DCR changed the method of providing notice of “Local Compliance Underway” for state applications. DCR will not provide notice of local compliance underway if an applicant does not submit a complete Temporary Approval application and pay all required fees. Further, DCR is no longer providing stand-alone letters or notices of local compliance underway. Instead, an applicant will receive an email when their record status in the Accela portal is updated to “Local Compliance Underway.”  DCR deems an applicant eligible for a Local Compliance Underway email after the applicant completes the pre-approval review process and has submitted a complete Temporary Approval application and paid all applicable fees. For purposes of submitting the state application, the applicants can use the Temporary Approval invoice as evidence of Local Compliance Underway. The applicant should not submit the state application until receiving confirmation from DCR that they have Local Compliance Underway.

New Modification Process

Beginning September 1, DCR will initiate a new modification process. Applicants will no longer be required to register an “Intent to Submit a Modification” then wait for DCR to open the modification application. Now, applicants will have the ability to submit the modification request directly through the DCR portal. To file a modification request, applicants must upload all forms and documents and pay all fees prior to DCR reviewing the modification application. All the required forms will need to be submitted prior to receiving an invoice to pay the modification fees. 

The anticipated processing time for the modifications will range from 30-120 days depending on the modification type. Minor modifications, such as entity name change, FBN change, and ownership change that is not 100%, will be processed within 30 days. Major modifications, such as an entity substitution, relocation, or 100% ownership change, will be processed within 120 days. When submitting a major modification, the applicant can still operate under the previous ownership and/or entity and/or location while DCR is processing the new Temporary Approval application. Once DCR is ready to issue the new Temporary Approval, the applicant is required to withdraw the existing license using the DCR form, then DCR will issue a new record number and Temporary Approval for a new location or a new entity. 

DCR has removed the modification to add a cannabis activity to an existing application. If an applicant wishes to add a cannabis activity, a new application needs to be submitted for the new activity. Once the new activity receives Temporary Approval, the applicant can combine the two licenses into one record.

Renewal Application

As a reminder, the annual DCR renewal application period will open September 2 and close on November 2. All DCR applicants, including Phase 1, Phase 2 and Phase 3, are required to submit a 2022 renewal application during the renewal application window. DCR has not yet released full details regarding what will be required for the renewal application. At minimum, the renewal application will require the application and renewal fees be paid prior to November 2. There are no exceptions. The renewal application must be submitted using the current DCR forms and many will require notarization. KVK has in-house notaries to assist clients with notarizing the forms if needed.

Phase 2 Deadlines

All Phase 2 applicants that fail to obtain Temporary Approval by September 30 may have their application deemed abandoned. Phase 2 applicants that have not been granted Temporary Approval by September 30 must complete one of the following to avoid having the application deemed abandoned: (1) upload all Temporary Approval documents to the record by September 30; or (2) have a modification request that was approved between January 1 and September 30; or (3) have a pending modification by September 30. Phase 2 records that do not comply with one of these requirements by September 30 shall be deemed abandoned. 

If you have any questions on any DCR process, application forms, or application status, please reach out to our licensing and compliance team by calling the office at (310) 943-9587 or via email at aj@kvklawyers.com.

By: Ariella Joffe, August 27, 2021