Amid questions about the fairness of the process and potential problems with the online application system, City Council President Herb Wesson announced Tuesday he has asked the Department of Cannabis Regulation to suspend the processing of requests for specialized marijuana retail licenses.
Wesson sent a letter to Cat Packer, the executive director and general manager of the DCR, saying the city has confirmed allegations that some people applying for licenses under the Social Equity Program had accessed the online application portal prior to the application period opening at 10 a.m. Sept. 3.
“While it was always understood that not every applicant would get a license, it is paramount that the application process have the utmost integrity, be transparent and fair,” Wesson wrote.
He said there “appears to be no scenario” in which the current application can “meet those three principles.”
The Social Equity Program is open to people who are considered low-income and/or have a low-level criminal history related to cannabis and operate in a “dispensary-impacted area,” most of which are located in South Los Angeles and Hollywood.
Wesson recommended that the DCR suspend all processing of the applications submitted during the recent period, refund any applications fees that were paid and cancel all processed invoices. He also called for a third-party audit of the process.
Calls to the DCR about Wesson’s recommendations were not immediately returned.
Dozens of program applicants attended a meeting of the Los Angeles Cannabis Regulation Commission on Thursday, complaining about the process. Some suggested that their applications were not fairly processed, while others said the website wouldn’t work with their internet speeds. Some said believed certain people were given priority in the system, which was supposed to randomize applicants.
Commission President Robert Ahn asked for a report from Accela, the company hired by DCR two weeks ago to run the application system, to see if it can find any irregularities. He also said he wants to put a “fair remedy” in place for anyone who has been unfairly processed.
“But I think one thing that we need to make clear is that the process is everything,” Ahn said. “The integrity of the process must be upheld at all costs.”
According to the DCR, nearly 1,900 people registered in July to apply for licenses under the Social Equity Program, and it expected hundreds more to do so. Only 100 licenses are expected to be approved in this application phase, according to DCR.
In the first two application phases, the agency doled out temporary approval status to almost 300 existing dispensaries and cannabis providers and is now reviewing applications for delivery and additional retail licensing.
The commission voted unanimously to request the City Council extend the allowable time from when an SEP applicant was convicted of fraud or embezzlement from five to 20 years, as they said they didn’t want someone with that kind of criminal record to take advantage of what’s intended to be a subsidized business platform.
A report from City Controller Ron Galperin earlier this month noted that the city collected more than $70 million in cannabis business and sales taxes last fiscal year.
The California Bureau of Cannabis Control recently announced it will spend $10 million to help social equity programs in cities, including Los Angeles and Oakland.
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