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A coalition of numerous organizations involved in the Los Angeles Cannabis Equity Program is calling on the mayor and City Council to take a closer look at predatory practices currently happening.

The organizations, now going by the Cannabis Oversight Committee (COC), includes The Southern Christian Leadership Conference, California Minority Alliance, National Diversity & Inclusion Cannabis Alliance, Los Angeles Metropolitan Churches, GoVerde Enterprise Development Corporation, The Hutt Group, Black Women’s Cannabis Council, Concerned Citizens of South Central Los Angeles and the Southern California Coalition. Americans for Safe Access is also on the roster of letter signees, but not listed on the COC’s website. ASA has been involved in the L.A. cannabis policy scene for nearly two decades. 

In addition to the points they list in the letter, the Cannabis Oversight Committee notes on its website that the group’s position is the authority of the City of Los Angeles Department of Cannabis Regulations to enact fair and transparent licensing has been gravely compromised and must be mitigated to ensure full compliance with ordinances.

“THE AUDIT REVEALED AN EVEN GREATER NUMBER OF BREACHES!,” they wrote in all caps.

In the letter to the city leaders, the COC noted its membership was made up of many of the founding organizations involved in the L.A. cannabis equity movement who have collaborated with the city since the beginning. That being said, they also noted they were the first to sound the alarm when they believed impediments to a fair and inclusive process started to present themselves. 

In COC’s list of 18 demands, first and foremost they want the city to ensure that Phase III applications from the first round are free of predatory practices by conducting a vetting of all invoiced applications. If it’s found that anyone was victimized by predatory agreements, loans or partnerships, COC wants those victims to be able to amend their applications to remove the predatory partner, investor or lender to prevent the application from being rejected. 

They only want those Tier I and Tier 2 applicants who fell victim to unsavory business practices to be able to amend their applications. The letter said those who are found to have taken part in the shady business should not be allowed to resubmit any applications or licenses. COC believes impacted businesses should have 90 days to find new partners, investors, lenders or storefronts. 

COC wants this new audit of applicants to be done by a third party that would report to the city. They want the methodology of the review to include a clear pass or fail grade for the business agreements surrounding the initial 100 Phase III applicants.

From there, the letter heads in a new direction. COC wants a new round of licensing alongside the delivery pilot program that would add 150 additional social equity retail storefront rotations. They even know what they want the city to call it, Phase III Round 1B. All of the 226 applicants that logged in early on the first day of the original Phase III licensing round would not be allowed to participate. 

The 226 number is a bit confusing though. As noted in the final audit report from the first doomed Phase III licensing round, a total of 14 applicants were able to access the portal early after password resets. Then 222 applicants signed-on following the re-enabling of all accounts around 9:59:46.

COC also wants the city to change the definitions of the different tiers of social equity applicants, to add a financial threshold for the Tier II applicants, and get the delivery pilot program going as soon as possible.

As we noted in April, the initial review of the Phase III Round 1 licensing process has essentially vindicated the DCR’s steps to remedy advantages any applicants gained from accessing the city’s online licensing portal early. But the points raised by the letter are certainly a separate deeper issue than getting into the licensing portal early.

On the heels of the final audit report last month, the Los Angeles Department of Cannabis Regulations told L.A. Weekly it was working on the recommendations they took away from the first review of Phase III and it looked forward to engaging with stakeholders and policymakers on the recommendations to address ongoing opportunities and challenges related to our licensing and social equity programs. It would certainly seem the potential new round of licensing being requested by stakeholders would do just that. 

The Minority Cannabis Business Association was not among the letter’s signees but agreed with the general points being raised. MCBA’s LA-based chairwoman Jazmin Aguiar, who also serves as president of The Working Group and is an equity stakeholder, raised concerns the letter didn’t truly address retroactive issues and sought more to right the course of the equity program moving forward.

“It’s taking a let’s take it from here approach and let’s move forward, instead of getting to the root of the problem with the social equity program,” Aguiar told L.A. Weekly.

As for the problems with Phase III licensing,

“Yes that’s an issue and we need to address it, but before we got into the application process for Phase III social equity applicants didn’t need a property,” Aguiar said. Those real estate deals are where some applicants got fleeced the hardest. Aguiar believes leaving predatory landlords off the list of people victimized applicants could escape from was a bad move.

“Here they don’t even mention landlords, who are the most predatory component to a social equity applicant. It doesn’t include that and it should,” Aguiar said

We asked Aguiar if she generally agreed with the beef of the specific points raised about predatory practices in the letter. She replied they are great but need to be expanded to landlords as well.

In the end, at the same time people have their frustrations with the city’s licensing process, the main point of COC’s letter was to address predatory business practices being used to take advantage of people from the communities the equity program is meant to empower. Anyone who would claim DCR chief Cat Packer wasn’t among the earliest voices to raise a concern about these social justice carpetbaggers is certainly mistaken, but now we’ll see what she and the rest of the city’s regulators attempt to do about the ones that have made it this far.