STEVE MARTIN 🍁 Does WeHo need more cannabis dispensaries?

Do residents believe West Hollywood needs any additional cannabis dispensaries? At tonight’s meeting, City Council is scheduled to approve a pathway to open more marijuana outlets.

With the recent closure of Med Men’s flagship West Hollywood storefront and our existing operators struggling, it does not seem like a great time to be licensing additional dispensaries.

But last month city staff proposed an update to the city’s cannabis ordinance that would open the door to six new dispensaries in the city, doubling the number of cannabis retailers in the city by over eight envisioned when the city first adopted its cannabis ordinance in 2017.

On Monday night, the City Council has a chance to reject the additional six new cannabis dispensaries recommended by staff, by voting down the staff proposed “pause” to the city’s current deadlines for unopened cannabis businesses and vacating the licenses of those businesses who have failed to meet the licensing standards set by the city.

On January 4th, Danny Rivas, director of Community and Business Safety, introduced a proposed plan to our existing cannabis operators, that would allow holders of “Edible Lounge” licenses to expand to having smoking throughout their facilities and sell products directly to consumers without requiring them to sit down and consume any product in their lounge.

The city’s “legacy” cannabis operators, who spent decades fighting prohibition, and our current Adult Use Retailers, who have spent millions opening world-class dispensaries like the Woods, Artist Tree and Pleasure Med, emphatically rejected staff’s proposal.

In 2018 the city had a merit-based screen process to award cannabis licenses across five categories: Medical, recreational, delivery, edible lounges, and lounges with full smoking rights.

Some licenses were more popular than others. While the city received nearly a hundred applications for recreational dispensary and full consumption lounge licenses, only twenty applied for the edible lounge type license. The market by and large decided that these licenses were less valuable and less economically viable, but some entrepreneurs applied for and were awarded these less valuable licenses.

With two exceptions, winners of the edible lounge licenses were not awarded licenses in other categories. One edible lounge winner scored 62nd in the more completive full consumption lounge so the edible license was something of a consolation prize.

Frustrated that it was taking too long for cannabis businesses to get open, in 2020 the city created deadlines for these businesses to open. After having three years to secure approval from the Business License Commission, businesses were given two years thereafter to show substantial and diligent progress in actually opening. If the licensee continued to be diligent in moving their businesses forward, they would be eligible for two additional six-month extensions, thus giving everyone up to six years to open their businesses from the date they were awarded their licenses.

February 1st was a key date because that was five businesses needed to demonstrate substantial and diligent progress or lose their licenses.

But rather than focus on actually getting their businesses open, certain licensees lobbied city staff to change the rules and grant them additional time.

The city’s current cannabis operators, who have spent millions of dollars to comply with the city’s rules, asked that the city set some standard for awarding these extensions-by asking the city staff to define what the city considers to be “substantial and diligent” progress and requiring these licensees to have a current lease or clear title to the property were their business will be located. These requests seem reasonable. If people can’t get their act together, why should they get a break, particularly at a time when it appears that the WeHo cannabis market is saturated. Why should staff be authorized such unfettered discretion to extend deadlines for applicants who are not following the rules?

In response to these reasonable requests, city staff unilaterally and without public discussion, has proposed to modify the existing edible lounge license types to give them more rights than any of the other license holders.

The city is proposing a six month “pause” to allow the unopened businesses. This essentially gives them an additional six months beyond their current deadline. In order to garner support from the existing operators, the city is proposing a 1% “rebate” in local cannabis taxes for six months.

It should come as no surprise that the city’s 11 cannabis business owners are opposing the city’s proposed changes. The proposed “tax rebate” is a rather obvious attempt to buy the support of the existing operators, even though the real value of a tax rebate is paltry.

The existing operators have emphatically said “no” to this proposal four times and have offered more constructive and equitable solutions, ideas which city staff has chosen to ignore.

Rather than engage in meaningful dialog with existing operators and residents, staff moved ahead with their proposal, which City Council approved at the January 22nd meeting. The ordinance allowing for the “pause” to the delinquent licensees is back for second reading at tonight’s City Council meeting.

Hopefully at least one councilmember will stand up for common sense and pull the item and have it sent back for further discussion. Both residents and the existing cannabis operators deserve an opportunity to be heard in a meaningful way. It simply does not make sense to change the rules of the game for a favored few, particularly when it may result in the opening of additional and redundant cannabis businesses.