Unless a Compromise Is Reached by August, There Will Be Two Cannabis Initiative on the Ballot

Come November, West Hollywood voters will likely see two competing initiatives on the ballot regarding the city’s cannabis shops. At its last two meetings, the West Hollywood City Council approved sending the two initiatives to voters.

Both initiatives would alter the city’s existing regulations about cannabis shops, although one drastically more than the other. However, the City Council also hopes that a compromise between the competing initiatives can be reached before the early August final deadline for placement on the November ballot.

The first initiative seeks to rewrite large portions of the city’s cannabis regulations, regulations that city staffers spent a year drafting with significant input from experts and residents. The second one seeks to keep the those  existing cannabis regulations intact except for some minor changes.

The first initiative was instigated by the city’s four original cannabis dispensaries – MedMen, Alternative Herbal Health Services, Los Angeles Patients and Caregivers Group, and Zen Healing Collective – collectively known as “The Originals.” These four shops have been selling medical marijuana for years and automatically received licenses to continue to sell medical marijuana under the city’s new cannabis regulations enacted after California legalized sale of recreational marijuana beginning in 2018.

These four Originals all applied for licenses to become “adult use retailers,” which sell recreational marijuana. However, all four were denied those adult use licenses after a committee determined eight other shops had better proposals. Eight is the maximum number of recreational or “adult use” cannabis shops the city will allow.   

However, while those eight recreational marijuana shops that did receive approval were busy getting their business licenses and building their stores, the city has allowed the four Originals to temporarily sell recreational cannabis. Those temporary recreational licenses expire at the end of 2020, at which time the Originals will be forced to resume selling only medical cannabis. The problem is, since legalization, people no longer need a doctor’s recommendation to purchase cannabis, so the medical cannabis business has essentially dried up. Only about three percent of all cannabis sales in the state are medical cannabis now.

The Originals lobbied the City Council to give them permanent licenses to sell recreational marijuana, but the Council refused. Consequently, the Originals circulated a petition to combine the medical marijuana and the “adult use” retailers license categories, thereby expanding the number of recreational shops from eight to 16 and, in the process, granting recreational licenses to the four Originals. Their petition also includes numerous other changes to the city’s regulations governing cannabis shops including combining consumption lounge categories and changing the rules regarding sale/transfer of licenses. Because the Originals received the required number of signatures on their petition, the City Council voted unanimously at its June 1 meeting to send it to the voters in the November election.

The second initiative was started by the eight businesses that received approval to open recreational marijuana shops in the city. Those eight shops banded together under the name Adult Use Retailers Association of West Hollywood (AURA) to fight the Originals. This second initiative would keep the number of recreational marijuana shops in the city at eight, thereby leaving the city’s existing regulations governing cannabis shops in place, save for some minor alterations.

As AURA began collecting signatures on its petition in mid-March, the coronavirus Safer at Home quarantine orders went into effect, thereby making it almost impossible to gather enough signatures to quality for the November election. Consequently, AURA requested the City Council back its initiative and place it on the ballot. Since this item keeps the city’s existing regulations largely intact, the City Council voted 4-1 on Monday night to also put it on the ballot.

Councilmember John Duran, who has previously indicated he supports giving the Originals recreational marijuana licenses, cast the only dissenting vote. Duran objected that if this second initiative is approved by voters, it locks in place the city’s regulations regarding cannabis shops. Any future changes to the laws would have to be sent back to the voters.

As Duran explained, the cannabis industry is still new and provisions regarding its regulation and sale are still evolving. Thus, the city needs flexibility to change the laws as needed.  

“We’re dealing with an issue – cannabis regulation that is so fluid and so changing depending on state, county or local law – that to solidify or cement in a proposal by initiative that cannot be amended without going back to the people becomes highly problematic,” said Duran. 

City attorney Lauren Langer confirmed the items covered by the second initiative would be locked in place, if the voters approve it. However, the first initiative, if approved, has a provision allowing the City Council to make minor changes to the cannabis laws provided they are in keeping with the intent of the initiative.

Duran suggested simply making the minor changes to the city’s existing cannabis laws that the second initiative calls for immediately, thereby eliminating the need to put the second initiative on the ballot. That way, the voters would only have to decide about the first initiative.

If all this sounds terribly confusing, that’s exactly what the City Council is afraid of. Voters will have to do serious research to fully understand the differences in the two initiatives. Voter education will be costly for both sides and there is huge potential for both sides to spread false or misleading informative about the other side’s initiative.

That’s why the city is hoping a compromise can be reached and both initiatives withdrawn before the election. That will require the two sides to sit down and have serious talks over the next six weeks. The first week of August is the final deadline for placing the two initiatives on the November ballot.

“There is still an opportunity for us to be engaged in negotiations that will maybe not make everyone happy, but at least move us forward where we’re no longer dealing with Marijuana Wars,” said Councilmember John Heilman. “That’s what really this is all about. It’s two competing sets of businesses trying to use our city processes to either preserve an advantage they already have or to gain an advantage against competitors.”

California’s cannabis industry is set to become a multibillion-dollar industry. Sales in West Hollywood alone will likely amount to tens of millions of dollars, so there’s a lot at stake. Whichever initiative wins, the city benefits from the tax revenue generated by those marijuana sales. However, also at stake is the huge amount of time residents and city staff spent getting input and crafting the city’s current cannabis regulations. Additionally, hundreds of businesses spent thousands of dollars applying for the cannabis licenses.  The more than 300 applicants for licenses in eight categories paid the city nearly $3 million in application fees.

If both initiatives do ultimately appear on the November ballot, whichever receives a majority vote will be put into law.

However, the first initiative contains language stating that if both receive a majority of votes, but the first one gets more votes, then the first one is fully enacted and second one is nullified. However, the first initiative also states that if both receive a majority of votes, but the second one gets more votes, then the second one is fully enacted but the parts of the first initiative that do not conflict with the second initiative are still enacted.