What is a commercial cannabis activity?

Commercial cannabis activity (California business and professional code 19300.5)  includes the cultivation, processing, manufacturing, distribution, testing, transportation, dispensing, or sale of any part of the cannabis plant or of cannabis derived product, whether for medical or non medical (recreational) use.

How does commercial cannabis activity differ from personal cannabis use?

Individuals may however purchase, possess, and use small amounts (up to 28.5 g non concentrated / 8 g concentrated) of cannabis for personal use   and cultivate up to six living cannabis plants indoors at a personal residence for personal use. Such personal cannabis use IS NOT considered commercial cannabis activity.   The individual can give away the cannabis to another person 21 or older.

What commercial cannabis activity is allowed to asset limited immunity?

Commercial cannabis activity can assert limited immunity ( LA Municipal code section 11.00 , 12.27.1 or )  when

  1. Conducted by a person that is both licensed by the State of California to engage in the activity and recognized by a compliance document issued by the city’s cannabis commission
  2. Located within certain zones
  3. Meeting additional regulations stated in the ordinance.

What are the certain zones?

  • Dispensary and retailer commercial cannabis activity- primary commercial and manufacturing zones: CR, C1, C1.5, C2, C4, C5, CM, HI, M1, M2, M3
  • Cultivation, manufacture and microbusiness commercial cannabis activity- primarily manufacturing zones: MR1, M1, MR2, M2, M3
  • Testing and Distribution commercial cannabis activity- primarily manufacturing zones: CM, HI, MR1, MR2, M2, M3
  • Dispensary- retailer and microbusiness activity: 800 feet from schools, from alcoholism/drug rehabilitation or treatment facilities, from public libraries, from public parks, and from other cannabis retail, dispensing and microbusiness activity.
  • CULTIVATION, MANUFACTURE, TESTING AND DISTIRBUTION activity with NO retail or dispensary on same site will not be subject to distancing requirements.
  • Dispensary, retailer and microbusiness activity with NO on-site sales (delivery only) WILL Not be subject to distancing requirements.


Is there a fine to smoke cannabis in a place not allowed by the city and the state law?

Yes the fine can be up to $250.00.

What are the provisional licensing requirements for City of LA?

  1. Upon Initial approval, you will receive a provisional license and once you get your state license to operate, the city will issue you a permanent city of LA license.
  2. Certificate of approval will give first priority in processing EMMD (existing medical marijuana dispensaries (EMMD’s) that demonstrate to the department that the EMMD has operated in compliance (NOT substantial compliance) with the provision of the limited immunity and tax provision of Proposition D. The EMMD will have 60 days to get their applications in and after that, the application window closes INDEFINITELY.   EMMD must make sure that there are no Migrating circumstances due to gaps in operations, location, change or involuntary closure , ownership, tax payments, etc.  And must be described in detail for the Department to consider eligibility.
  3. Non retail registrants (growers and manufactures, the social equity program and the general public will not receive any priority.
  4. EMMD will only be allowed to apply for Retailers Commercial Cannabis Activity (including delivery), which may include on site cultivation ( may not exceed the size of the EMMD’s existing canopy or square footage of building space as documented by a lease or certificate of occupancy prior to 1/1/2017) as allowable under Prop. D.
  5. A maximum of three licenses per EMMD with a valid Business Tax Registration Certificate will be allowed- the example the city give is : One type 10(retailer) , one type 10( retailer with delivery)And one type 2A or Type 3A ( on site cultivation if applicable)
  6. A EMMD and any cannabis applicant can change ownership status from non profit to profit status. All LA operators should think about changing status from non profit to profit business entity in order to apply for a license with the City in line with California Corporations code.
  7. The City of Los Angeles is still working on its social equity program. It is expected that will be finalized and made part of the Prop. M rules sometime in October.
  8. The general public will be allowed to apply for licenses at the same time as the social equity program opens up.
  9. The most positive change for the general public is that they are no longer limited to the number of licenses that will issue in the social equity program. Without a doubt, the general public now has a much better chance to participate in L.A.’s cannabis scene.
  10. All retailers and microbusiness in the city will be limited to three licenses at the most.
  11. There are no license caps or cultivators so long as a given business does not have more than 1.5 acres of plant canopy within the City.
  12. Type 7 volatile manufacturing is now allowed (previously it wasn’t), and there are no set caps on manufacturing licenses within the City.
  13. There is no licensing cap for distributors
  14. Applicants must provide a site diagram to the City. The premises must be a contiguous area and may only be occupied by one business.
  15. However, multiple businesses may be located on the same property (as established by an assessors parcel number) if each premises has “a unique entrance and immovable physical barriers between unique premises.
  16. Applicants must provide a detailed description and plan for hiring” Local residents “ including making an ongoing good faith effort to ensure that at least 30 percent of hours of their respective workforce be performed by residents of the City of Los Angeles, of which at least 10 percent of their respective workforce shall be performed by Transitional Workers ( an individual who, at the time of commencing work at the business, resides in an Economically Disadvantage Area or Extremely Economically Disadvantaged Area and faces at least two of the following barriers to employment
    1. Being homeless
    2. being a custodial single parent
    3. receiving public assistance
    4. lacking a GED or high school diploma
    5. having a criminal record or other involvement with the criminal justice system
    6. suffering from chronic unemployment
    7. emancipated from the foster care system
    8. or being a veteran.
    9. whose primary residence is within a 3 miles radius of proposed business.
  17. An applicant with 10 or more full time equivalent employees must enter into a labor peace agreement.
  18. Neither the city licenses nor the businesses are transferable once a provisional or permanent license issues, but you can still apply to the city to change the business structure, which does allow for you to sell the business so long as the City of LA approves the sales.
  19. No licenses retailer of alcoholic beverages or tobacco products can apply for a City of LA cannabis license.
  20. Foreign companies from outside the US are not allowed in the City, but the city specifically states that this prohibition” does not preclude out of state investment in business proposing to conduct commercial cannabis Activity.

What are the compliance requirements for city of LA?

  • Was operating as a medical dispensary in the City by or before September 14, 2007.
  • Had a business tax registration certificate (BTRC) or tax exemption from the city by or before September 13, 2007
  • Was registered as a medical marijuana dispensary with the City Clerk by November 13 2007 pursuant to the then existing pre-interim control ordinance number 179027(deletes the hardship exemption).
  • Notified the city Clerk by February 8. 2011 of its intention to register under the city’s Medical Marijuana ordinance 181068, as amended by temporary urgency ordinance 181530 (registration compliance period is increased by additional 180 days or 540 days after June 7, 2010).
  • Has not ceased operation at its identified location for any of the following reasons
    1. Court or government enforcement order to shut down
    2. Lack of a lease or utilities (in the name of the dispensary or one its managers/directors)
    3. Temporary closed down because of a shutdown letter from Feds or the City prior to the temporary urgency ordinance of 1818530 but then re opened
  • Obtained its BRTC (business tax registration certificate) for 2011 and 2012 and has continued to renew those BTRC’s with the city
  • Has not outstanding tax or unpaid tax liability with or to the city (including any fines, penalties) There are some exception on payments during 2011 and 2012 tax years and settlement agreements with the City are also exempt
  • Has continuously complied with the various operational requirements in Proposition D
  • Has had all dispensary managers over the years submit to the City Livecan checks ( fingerprinting)
  • From property line to property line, is at least 1000 feet away form any schools (or at least 600 feet away from any parks, churches, and child care facilities, public libraries, youth centers, rehab facilities and other dispensaries.


What happens if you operate without a city/state license?

The City Attorney’s office has filed criminal actions against more than 1700 marijuana businesses and shut down more than 800, since the enactment of Proposition D, a ban on marijuana business.  Rob Wilcox for that office, said officials continue to enforce the measure and purse criminal cases against such business.


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Sheena Rude, BA, MBA, JD, ESQ.

26565 West Agoura Road
Calabasas, California 91302
Phone: 818-658-3700

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