After Months of Delays, Los Angeles Begins Licensing for Marijuana sales

LOS ANGELES (AP) — Los Angeles began accepting license applications from marijuana growers, manufacturers and testing companies Wednesday, Aug. 1, 2018, after months of delays that left many businesses in the state’s largest legal marketplace struggling to survive.

Marijuana plants are displayed Sept. 28, 2017, at the Green Goat Family Farms stand during the State of Cannabis, a California industry group meeting in Long Beach, California. The start of Los Angeles’ licensing process Wednesday, Aug. 1, 2018, arrived with a mix of relief and anxiety from businesses that have been waiting to enter the state’s recreational market, which began Jan. 1, 2018. (Associated Press File Photo/Damian Dovarganes)

The start of the process arrived with a mix of relief and anxiety from businesses that have been waiting to enter the legal economy since Jan. 1, 2018, when California broadly allowed cannabis for adults.

“We’ve been hanging on by the skin of our teeth,” said retailer and cultivator Donnie Anderson, who has been paying thousands of dollars of rent for months on commercial space he hasn’t been able to use without a cultivation license.

Los Angeles was once expected to be a showcase for the state’s legal cannabis economy, but it has moved cautiously with licensing and its market has developed more slowly than in San Diego, Oakland, and other major cities.

So far, L.A. has licensed only about 150 retail shops, with the rest of the supply chain in limbo.

Across the state, the effort to transform the long-established cannabis industry — much of it illegal — into a multibillion-dollar regulated marketplace has been uneven at best. Illegal sales continue to flourish, undercutting legal shops, while there are widespread complaints about hefty taxes on purchases and growing.

In California, local governments are permitted to outlaw commercial cannabis activity, so the availability of legal cannabis depends on where a customer is trying to make a purchase. Initial tax collections by the state fell far short of initial projections.

It’s also not clear when the first cultivation licenses for recreational pot will be issued by the city. L.A.’s top pot regulator, Cat Packer, executive director of the Department of Cannabis Regulation, said in July 2018 that the city didn’t want to commit to a timeline because rules continue to change as the new system is refined.

Cat Packer is executive director of the city of Los Angeles’ Department of Cannabis Regulation. Los Angeles started accepting license applications Wednesday, Aug. 1, 2018, from marijuana growers, manufacturers and testing companies — eight months after California broadly legalized cannabis. (Associated Press Photo/Richard Vogel)

Industry insiders have warned that delays in licensing threaten the marijuana supply chain, which could collapse and leave store shelves depleted.

Cannabis industry attorney Aaron Lachant said the slow pace of licensing has crimped supplies, leaving a relatively small number of cultivators and manufacturers supplying storefronts across the state.

In Los Angeles, retailers have turned to Northern California and Central California to bring in products from licensed operators. Under state law, licensed retailers can  do business only with other licensed companies.

Without licensed growers and manufacturers in L.A., “the retailers have had to figure out new supply relationships with licensees across the state,” Lachant said.

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