Proposed rules for medical marijuana businesses in America's pot-shop capital would snuff out “volatile cannabis manufacturing” — the type that produces popular concentrates such as wax and shatter — while allowing dispensaries to set up much-sought-after delivery programs for patients.

The draft regulations were unveiled this week as part of City Hall's rollout of Measure M, a voter-approved law that allows the City Council to finally fully legalize marijuana shops and to license cultivators, producers and deliverers. The proposed rules did not settle a contentious issue, however: how many pot shops would ultimately be legalized in L.A.

By the same token, the proposed rules don't offer much guidance for dispensary operators who plan to shift to recreational sales, expected to begin under California's Proposition 64 on Jan. 1. They simply say that would-be licensees must indicate whether “business will involve medical and/or recreational commercial cannabis activity.”

“This is just a starting point for discussion,” says attorney Aaron Herzberg, a partner at CalCann, a firm that invests in cannabis-related real estate.

“We will be reviewing the city’s draft regulations in greater detail and responding in the near future with our policy recommendations, along with any other concerns, in an effort to strengthen the draft regulations in a constructive way,” Virgil Grant, president of the city's largest organization of cannabis businesses, the Southern California Coalition, said in a statement.

The city's other major marijuana business group, the United Cannabis Business Association, said much the same in a statement. “Over the next few days, we will review the draft regulations and zoning requirements that have been put forth by the City Council after months of thoughtful discussion with the industry and community,” president Jerred Kiloh said.

The proposed rules don't make it entirely clear how the city would determine which shops get to be first in line for local licenses. Under voter-approved Proposition D, only about 135 dispensaries enjoy limited legal immunity from prosecution. Those business are supposed to have priority for licensing under the draft regulations. But figuring out which ones those are has proved to be daunting. However, this week the City Controller released a pot shop map that includes 139 “compliant” shops, so that could be a starting point.

From there, it's not clear how many more retail hopefuls will get to sell weed to the public. “It's going to be a huge issue,” Herzberg says.

The proposal also gives growers and manufacturers in business since 2016 a pass to continue operating while their applications are processed. Herzberg calls this “a prize” for cultivators and producers who allegedly haven't been following the law.

The proposed regulations require that applicants for marijuana business licenses must make a good-faith effort to ensure that nearly one-third of their firms' work hours are performed by L.A. residents.

This week the City Attorney's Office revealed plans to create a city Cannabis Commission and a Cannabis Department, both tasked with overseeing regulation. The department would have an executive director.

The proposed regulations will receive 60 days of public airing and could subsequently be revised.

“We will continue to have a robust dialogue about the regulatory framework and a healthy debate of Los Angeles’ growing cannabis industry prior to final recommendations being considered by the City Council,” council President Herb J. Wesson Jr. said in a statement. “I’m calling on all residents and stakeholders to provide comments and feedback on the draft documents to ensure the pending regulations are inclusive of all communities.”

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