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Delivery, Diversity Top Concerns at LA City Council Hearing

At 6:30 p.m. this past Wednesday night, Los Angeles City Hall council chambers were packed with cannabis business owners, activists, and community leaders, all looking to voice their opinions about how the city should regulate the coming adult-use cannabis industry.

'California has voted for it. We have to regulate it.'
Herb Wesson, LA City Council President

“California has voted for it. We have to regulate it. And that’s what we’re attempting to do,” said City Council President Herb Wesson.

Los Angeles voters passed Measure M earlier this month, which gave the City Council oversight control of recreational cannabis. The measure also implemented a system of taxation for its sales, transportation, and cultivation. Now the hard work begins. LA must build a regulatory system from the ground up, creating rules on everything from consumer safety to enforcement practices.

For guidance, LA called officials from other states who have already been through the process. Both Rick Garza, director of the Washington Liquor and Cannabis Board, and Steve Marks, executive director of the Oregon Liquor Control Commission, told the Council that they modeled many aspects of their cannabis regulations on existing alcohol laws.

In Washington, law enforcement agents conduct regular bar visits to ensure that underage drinkers aren’t being served. The state adopted this requirement for cannabis businesses as well, with all retailers subject to a premises check at least three times a year, said Garza. As a result, they’re seeing a similar compliance rate at dispensaries as they do at alcohol establishments, at about 92 percent.

While Garza and Marks detailed their states’ approach to cannabis marketing and criminal background checks, the LA industry officials in attendance on Wednesday night seemed most concerned with two things: delivery and diversity.

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Delivery: Patients Demand It

Cannabis delivery has long been a confusion and contentious issue in Los Angeles. Making home cannabis delivery legal and accessible can be critically important for medical marijuana patients. Two of the city’s most popular services, SpeedWeed and Nestdrop, were forced to cease services within the city limits late last year, bowing to court injunctions initiated by the LA City Attorney. Although some delivery operations continue to do business within the city (either under the radar or by exploiting legal loopholes), the LA industry showed up in force to demand more legal opportunities for delivery services.

Sky Siegel, a member of the LA Cannabis Task Force, shared a personal anecdote at Wednesday’s meeting. After being hospitalized with a severe spinal injury, he  was immobilized, in need of cannabis, and unable to access the medicine he needed. Delivery services were his only option. Allowing cannabis delivery under new City regulations, he said, would help others in similar situations.

'We allow delivery of alcohol in Washington. I’m not sure why we shouldn’t allow cannabis.'
Rick Garza, Director, Washington State Liquor and Cannabis Board

“I know there are many under-served communities in the Los Angeles area that would benefit from medicinal cannabis,” Siegel said, “and I would like that thought not to be an afterthought, but something that’s actually developed in league with both the cities and the legislative partners in the state,” he said.

While many spoke in favor of decriminalizing delivery, there were divergent views on whether that would be best accomplished through strategic regulations or simply by loosening the city’s regulatory grip.

“Many regulations besides zoning are determined at the state level,” said Zachary Pitts of Goddess Delivers, a medical cannabis delivery co-op that ships product throughout the state. Those city regulations, he said, end up “intervening too heavily, and might push jobs and taxes to other municipalities.”

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Delivery is legal in Oregon, but delivery services operate under structured, detailed regulations that require companies to track any product that’s removed from a dispensary without being sold. Delivery is outlawed in Washington state, due in large part to problems early on with illegal product being distributed in major cities like Seattle, Washington Liquor and Cannabis Board director Rick Garza explained. Now however, Garza is reconsidering this policy.

“We allow delivery of alcohol in Washington,” he said. “I’m not sure why we shouldn’t allow cannabis, especially when you put it in the context of medical patients.”

Access to Capital: Big Diversity Issue

In addition to delivery, many speakers stressed the importance of having LA’s cannabis industry reflect the diversity and demographics of the city. Tomer Grassiany, a member of the LA Cannabis Task Force, asked Garza and Marks if their states’ businesses reflected the communities in which they operated.

Not so much, they answered.

“I think the social justice and equity issues…[were areas] that I wish we had considered,” said Garza. “It became clear to us after we closed the door that many of the minority communities felt that they were not able to get into the system.”

'Many of the minority communities felt they were not able to get into the system.'
Rick Garza, Washington LCB

Washington has no program to better incorporate women and minorities into the cannabis industry, said Garza. He stressed the need for Los Angeles to not follow his state’s lead in this regard. In Oregon, by contrast, Marks said state officials did extensive outreach to those groups and worked with the Minority Cannabis Business Association to try and diversify the ranks of the cannabis industry.

Both Garza and Marks emphasized that fairness in the cannabis industry has a lot to do with access: helping connect entrepreneurs with the education and financial resources they need to get their business up and running.

“That’s the biggest problem in this industry,” said Garza. Entrepreneurs “can’t go to a bank and get a loan.”

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Advice: Take Your Time

Garza and Marks warned Los Angeles council members to be patient when developing regulations. In Washington state, they spent about six months holding public forums and soliciting input from law enforcement, the cannabis industry, and the public before even starting to write cannabis regulations, said Garza. Those regulations then took another six months to actually complete.

“I would take the time you need, and I can share with you that it’s never going to be soon enough for the industry,” said Garza.

If Los Angeles sticks to the September 30, 2017, deadline outlined in Measure M, that only gives the city about six months total to settle on a course of action. City Council President Wesson argued, however, that Los Angeles has been gearing up for this process since early 2016.

“It’s almost a year that we’ve been having hearings, listening to the community, trying to adjust or take some of the recommendations that you make,” he said.

The LA City Council is now poised to establish a five-person Cannabis Licensing Commission, which will oversee the license and public hearing process, coordinate business inspections and audits, and work with the city to implement new regulations.