Dozens of Los Angeles marijuana businesses with permits that expired Dec. 31, 2020 will have until March to renew their licenses renewed, regulators announced. The news came days after the city’s Department of Cannabis Regulation informed licensees they would not be allowed to conduct commercial marijuana business after New Year’s Eve. Our Los Angeles marijuana business lawyers understand the about-face was based in large part to the widespread impact of the novel coronavirus on business owners’ abilities to pay renewal fees on time. COVID-19-related closures at the city’s finance office set things back even further.

The news impacts nearly 60 businesses with now-expired licenses.

The businesses faced a host of expensive consequences if the city chose to report them to the Los Angeles Police Department or other state agencies. Now, they will have until March 1st before such actions will be taken.

Any cannabis business struggling to comply with local or state licensing requirements or regulations should consult with an experienced Los Angeles cannabis business attorney who can help you work your way through the red tape.

In early December, a city councilman introduced a motion to give businesses until Feb. 28th to get their licenses renewed, something a DCR spokesperson said the agency supported.

L.A. Cannabis Businesses Cautiously Relieved

Response from local stakeholders in the industry was a mixed bag of relief but also trepidation. Some were quoted as saying they were grateful for the relief, but some unanswered questions remain. While the DCR has essentially said it’s going to look the other way for a few months, it’s unclear what exactly that means or whether there could still be penalties or other consequences for operating during that window unlicensed.

The DCR’s email expressly told those with expiring licenses that the agency’s decision was “in no way” meant it was abdicating its responsibilities or right to take action under local laws and regulations, and neither does it stop any other city or state agency from taking their own independent action.

Businesses that are technically operating on a local permit that is expired may be at risk of enforcement action from the California Bureau of Cannabis Control. If the agency initiated an inquiry into a certain operation, city regulators would have to be honest and say the business is operating without a license. That means these businesses are still potentially at risk of some enforcement action between now and March.

The hope is that the DCR and city council is acting in good faith, given that everyone realizes little good is going to come of it if these businesses are shuttered. If instead status quo can be maintained while cannabis businesses have a fair chance to catch up, there is less likely to be legal challenges and other costly action taken.

Some operators are considering relocating, considering the permit delays, confusion and other problems they’ve encountered operating in Los Angeles. They should make sure before they do that they’ve secured proper permitting in that locality. Our Los Angeles marijuana licensing attorneys are available to help answer your questions and be your advocate.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 714-937-2050.

Additional Resources:

In reversal, L.A. says no enforcement against nearly 60 marijuana firms with expiring permits, Dec. 23, 2020, By John Schroyer, Marijuana Business Daily

Trying to predict the California cannabis market was problematic even prior to an international pandemic that threw everything off course. Part of it is that this is the largest legal marijuana market in the world. Part of it is that it’s so new, being legalized for adult recreational use just three years ago. And part of it is the industry’s ongoing and fierce competition with a huge illegal market – all while the drug is considered illegal and highly addictive by the federal government.

That said, our Los Angeles marijuana business lawyers have been fierce defenders of those involved in cultivating, manufacturing, selling, using, prescribing and advertising marijuana for more than a decade. We have become deft at examining the trends as we advise our clients, many of whom were better off than some other businesses due to their designation by the state as “essential.”

In looking at the year ahead, our marijuana lawyers see a handful of factors that will likely impact the future of the industry and the clients we serve.

This has undoubtedly been a year of challenges for virtually all business sectors, but 2021 holds some promise for the continued growth of California’s burgeoning legal cannabis industry.

Some of the trends our Los Angeles marijuana business lawyers recognize as specific to our state include:

• More cannabis business license opportunities in Los Angeles and throughout the state.
• Ongoing evolution of consumer preferences as well as product maturation.
• Pressure from consumers and businesses on taxes and pricing.
• Newly available legal finance and banking services.

Although these are mainly positive developments on the horizon, some could lead to a degree of market volatility. Still, all indicators are that California’s legal cannabis market will continue to grow by leaps and bounds. Voters in various parts of the state passed dozens of local initiatives that establish a regulatory and tax framework for new marijuana businesses to become established. That means we’re going to see more marijuana businesses set up shop.

It’s true that the black market and cumbersome state and local taxation continues to weigh on existing businesses and hamper new opportunities, consumers are becoming more discerning between licensed and unlicensed operations. The value of licensing and regulation was especially poignant during the vape crisis, as well as the pandemic. We expect to see a heightened focus on health, safety, quality control, and legitimacy of products. Further, industry analysts expect licensed pot products will begin coming down in price, which would cut directly into the demand of unlicensed operators.

Demand is likely to remain high as well. Cannabis consumption has surged in the months following the COVID-19 pandemic, as people’s anxieties have mounted. While we do hope 2021 is far less stressful for everyone than 2020, it’s unlikely we’ll see a precipitous drop in the number of consumers, particularly with more product options available – some specifically designed to help with anxiety and insomnia.

There may also be increased demand among cannabis connoisseurs, who are anticipated to pay a premium for products designated by the new state appellations program, which launches next month. This is the program that works similar to the wine industry and allows for unique marketing opportunities based on cultivation methods and region.

Smaller Shops Feel the Squeeze

Although the niche market for marijuana continues to thrive, smaller retail shops have been feeling squeezed. Cannabis operations were deemed “essential” in the midst of the pandemic, but those with more capital to start have fared better. Supply chains are becoming increasingly sophisticated, and larger operators are increasingly dominating the market.

Competition appears to be especially fierce among manufacturers, though many cultivators too have expressed difficulty keeping pace with the meandering network of local and state regulations – particularly track-and-trace requirements.

All this may mean that some operations may be edged out of the market, though we may well see some operations shift to jurisdictions that have more favorable regulatory and tax rules.

Local delivery services continue to do well, particularly as concerns about the pandemic have changed the way people shop for marijuana. In one survey, nearly 4 in 10 consumers stated they were at least moderately concerned about going in-person to a marijuana shop.

Economic Reforms

Although it’s unlikely federal legalization will happen in 2021 (despite the recent passage of reform in the House, which probably won’t clear the Senate), we may see some easing of restrictions for financial services to cannabis companies.

This may allow many struggling operations to stay afloat, as they’d have debt financing options, credit and the ability not only to survive to but to innovate and possibly expand.

If you are a cannabis company in need of legal services to help you navigate these challenges, our experienced team can help.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 714-937-2050.

Additional Resources:

World $350+ Billion Cannabis Cultivation (Hemp, Marijuana) Market Size, Share & Trends Analysis to 2027, Dec. 3, 2020, Yahoo! Finance