FAQ: General Information on Social Equity Program

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GENERAL INFO ON SOCIAL EQUITY PROGRAM

When does the Social Equity Program start and what phase is it in now?

With the submission and review of Phase 2 applications underway, the Social Equity Program has already begun, in part, because all Phase 2 applicants must qualify under the Social Equity Program. The development and implementation of other Social Equity Program components are ongoing. Please check back periodically for updates.

Who qualifies for the Social Equity Program?

The Social Equity Program is divided between Tier 1, Tier 2, and Tier 3 Social Equity Applicants.

A Tier 1 Social Equity Applicant shall own no less than a 51 percent equity share of the business that would benefit from the issuance of the License and meet the following criteria at time of applying for a License:

  1. Low Income and prior California Cannabis Arrest or Conviction; or
  2. Low Income and a minimum of five years cumulative residency in a Disproportionately Impacted Area.

A Tier 2 Social Equity Applicant shall own no less than a 33 1/3 percent equity share of the business that would benefit from the issuance of the License and meet the following criteria at time of applying for a License:

  1. Low Income and a minimum of five years cumulative residency in a Disproportionately Impacted Area; or
  2. a minimum of 10 years cumulative residency in a Disproportionately Impacted Area.

A Tier 3 Social Equity Applicant shall enter into a Social Equity Agreement with the City to provide capital, leased space, business, licensing and compliance assistance for a period of three years to Persons who meet the criteria to be a Tier 1 Social Equity Applicant, and business, licensing and compliance assistance for a period of three years to Persons who meet the criteria to be a Tier 2 Social Equity Applicant. A Tier 3 Social Equity Applicant shall also provide Tier 1 Social Equity Applicants access to property with no rent and with prorated utilities for a minimum of three years in a manner consistent with LAMC Sec. 104.20(e)

What does Low Income mean?

As defined in LAMC Sec. 104.20, Low Income means 80 percent or below of Area Median Income for the City based on the 2016 American Community Survey and updated with each decennial census.

How do I prove I am Low Income?

You must provide evidence of your income for the 12-month period preceding the date of your application. Please view this Eligibility Requirement document for more information of the type of evidence to submit.

What types of prior cannabis-related arrests or conviction qualify an applicant for Tier 1 status?

An applicant who is Low Income and has a California Cannabis Arrest or Conviction will qualify for Tier 1 status (provided all other eligibility requirements, including equity requirements, are met). A California Cannabis Arrest or Conviction means an arrest or conviction in California for any crime under the laws of the State of California or the United States relating to the sale, possession, use, manufacture, or cultivation of cannabis that occurred prior to November 8, 2016. An arrest, prosecution or conviction for a violation of Proposition D, as codified in former Article 5.1 of Chapter IV of the Los Angeles Municipal Code, notwithstanding that Proposition D has been repealed, is not a California Cannabis Arrest or Conviction.

How do I prove I have a California Cannabis Arrest or Conviction?

Please view this Eligibility Requirement document for more information of the type of evidence to submit.

If I have a California Cannabis Arrest or Conviction anda non-cannabis-related conviction, can I still qualify for the Tier 1 status?

Even if you have a California Cannabis Arrest or Conviction, you may still be ineligible to apply for any License, as a Social Equity or non-Social Equity Applicant, if you have certain criminal convictions, including those involving violent or serious felonies. Please refer to LAMC Section 104.03(c) for a list of disqualifying convictions and time periods in which those convictions are disqualifying.

What is a Disproportionately Impacted Area?

A "Disproportionately Impacted Area" means an eligible zip code based on the "More Inclusive Option" as described on page 23 of the "Cannabis Social Equity Analysis Report" commissioned by the City in 2017, and referenced in Regulation No. 13 of the Rules and Regulations, or as established using similar criteria in an analysis provided by an Applicant for an area outside of the City.

How long did I have to reside in a Disproportionately Impacted Area (DIA) to qualify for Tier 1 or Tier 2 status?

An individual will satisfy the residency requirement for Tier 1 status if he or she is Low Income and has a minimum of five years cumulative residency in a DIA, and an individual will satisfy the residency requirement for Tier 2 status if he or she is Low Income and has a minimum of five years cumulative residency in a DIA or if he or she has a minimum of ten years cumulative residency in a DIA.

Did I have to live in a DIA for 5 or 10 consecutive years?

An individual will satisfy the residency requirement if he or she can prove that he or she has resided in a DIA in total for at least five or ten years (consecutive or nonconsecutive).

Do I have to currently reside in a DIA to qualify for Tier 1 or Tier 2 status?

No, an applicant only has to have been a resident in a DIA for 5 or 10 years at some point in time.

I am a City resident but I have not lived in any of the zip codes designated as a DIA in the City’s Social Equity Analysis Report. Is there any way for me to prove I’ve lived in a DIA in the City?

If a zip code in the City was not designated as a DIA in the City’s Social Equity Analysis Report, then residency in that zip code will not satisfy the residency requirement for Tier 1 or Tier 2 status.

I live outside of the City and believe my neighborhood was disproportionately impacted by the war on drugs. How can I qualify for Tier 1 or Tier 2 status?

An applicant who is Low Income can satisfy the residency requirement for Tier 1 or Tier 2 status if they establish that they resided for a sufficient period of time in a zip code outside of the City that was disproportionately impacted by the war drugs. To do so, an applicant must provide to DCR an analysis using similar criteria employed by the City in its Cannabis Social Equity Analysis Report, which can be found here.

What benefits does a Social Equity Applicant receive?

A Tier 1 Social Equity Applicant shall receive the following benefits: 1. business, licensing and compliance assistance; 2. expedited renewal processing; 3. program site specific conditions; 4. the potential for fee deferrals if the City Council adopts a fee deferral program; and 5. access to an Industry Investment Fund if established.

A Tier 2 Social Equity Applicant shall enter into a Social Equity Agreement with the City to provide business, licensing and compliance assistance to Tier 1 Social Equity Program participants. A Tier 2 Social Equity Applicant shall receive the following benefits: 1. business, licensing and compliance assistance; 2. expedited renewal processing; and 3. program site specific conditions.

A Tier 3 Social Equity Applicant shall receive the following benefits: 1. expedited renewal processing; and 2. program site specific conditions.

Additionally, Tier 1 and Tier 2 Social Equity Applicants shall receive priority processing for Retailer Commercial Cannabis Activity Licenses (Types 9 and 10) and for Microbusiness Commercial Cannabis Activity Licenses that include retail (Type 12) on a 2:1 ratio with all non-Social Equity Applicants (including Applicants issued Licenses pursuant to Section 104.07).

Tiers 1 through 3 Social Equity Applicants shall receive priority processing for all non-retail License types on a 1:1 ratio with all non-Social Equity Applicants (excluding Applicants issued Licenses pursuant to Section 104.08) based on License type category, provided that Tier 1 Social Equity Applicants shall receive priority over Tier 2 and Tier 3 Social Equity Applicants, and Tier 2 Social Equity Applicants shall receive priority over Tier 3 Social Equity Applicants.

Does a Tier 1 or Tier 2 have to have a business premises secured before submitting an application?

No. A Tier 1 or Tier 2 may submit an application before identifying a business premises. However, DCR will not issue Temporary Approval or a License to such an applicant before a compliant business premises is identified and passes a pre-license inspection.

Does a Tier 3 have to provide free space to a Tier 2?

No, a Tier 3 does not have to provide a Tier 2 access to property, although it is free to do so. A Tier 3 must provide business, licensing and compliance assistance for three years to a Tier 2.

Can a Tier 3 support a Tier 1 engaged in a different Commercial Cannabis Activity, e.g., a Tier 3 Manufacturer supporting a Tier 1 Cultivator?

A Tier 3 may support a Tier 1 and/or Tier 2 that will engage in a different type of Commercial Cannabis Activity than the Tier 3.

If a Tier 3 applies for multiple licenses, does it have to provide access to property to a different Tier 1 for each of license, or can it just provide access to property to one Tier 1?

A Tier 3 with multiple licenses may provide access to property to the same Tier 1 to satisfy the Social Equity requirements for each License. But the Tier 3 must provide the Tier 1 the total amount of property access required for all of the Tier 3’s Licenses. For example, a Tier 3 with one Cultivation License and one Manufacturing License would have to provide a Tier 1 with at least 1300 sq ft of property or 10% of each Licensed Business Premises, whichever is greater.

Can a Tier 1 or Tier 2 have partners or investors who do not qualify as a Tier 1s or Tier 2s?

A Tier 1 and Tier 2 must own no less than 51 percent and 33 1/3 percent, respectively, of the business that would benefit from issuance of the License. As long as that requirement is met, a Tier 1 or Tier 2 may have partners or investors who do not qualify as Tier 1s or Tier 2s, subject to any other ownership restrictions.