LA will become largest US city with recreational pot

2017-12-07 16:12
Georgette Sharp of the Coalition for Better Banks reacts to comments by Los Angeles City Council President Herb Wesson before the council voted unanimously to approve new regulations for the marijuana industry in Los Angeles. (Chris Pizzello, AP)

Georgette Sharp of the Coalition for Better Banks reacts to comments by Los Angeles City Council President Herb Wesson before the council voted unanimously to approve new regulations for the marijuana industry in Los Angeles. (Chris Pizzello, AP)

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Los Angeles - Los Angeles is in line to become the nation's largest city with legal recreational marijuana after the City Council voted on Wednesday to licence sales and cultivation in 2018.

The landmark vote came after a hearing in which council members characterised the rules as a work in progress, almost certain to see revisions in 2018 after California launches its recreational pot industry in January 2018.

Under the Los Angeles regulations, residential neighbourhoods would be largely off-limits to pot businesses, and buffer zones would be set up around schools, libraries and parks.

City Council President Herb Wesson's office said the rules would take effect immediately after the signature of Mayor Eric Garcetti, which is expected.

"The other cities in this nation, they are looking to LA," said Wesson, predicting the city model would become a template for legalisation elsewhere.

However, with the new year just weeks away – and the holidays coming – industry experts say it's not clear how many businesses, if any, will be ready to open their doors on January 1, 2018.

If demand is not satisfied by legal sales then "you are just giving oxygen to the black market we all want to eradicate", said Adam Spiker, executive director of the Southern California Coalition, a cannabis industry group.

'Emerging industry'

The route to legalisation began in 2016 when voters approved Proposition 64, which opened the way for recreational pot sales to adults in the nation's most populous state, home to one in eight Americans.

The state and hundreds of cities have been saddled with the challenging task of trying to govern a vast, emerging industry with a projected value of $7bn.

The result has been a patchwork.

Some cities have banned all commercial pot activity, while LA is among those that have embraced it, in part for the promise of a cascade of new tax dollars.

In San Francisco, Mayor Ed Lee signed legislation on Wednesday authorising recreational cannabis sales that could begin in the first week of January 2018, providing local businesses acquire required licences.

San Jose will allow its 16 medical marijuana dispensaries to sell recreational marijuana starting January 1, 2018, providing they acquire required licenses.

In LA, the dense set of regulations passed on Wednesday dictate where pot can be grown and sold in the new marketplace, along with how businesses will be licenced.

Rules

Businesses that want to participate in the marketplace need local permits before they can apply for state licences required to operate in 2018.

The rules include provisions intended to benefit those convicted of a marijuana-related offence and lower-income residents who live, or have lived, in neighbourhoods marked by high marijuana arrest rates. The programme aims to reduce the barriers to ownership of cannabis businesses through access to training programmes, employee training and technical assistance.

The uncertainty around the emerging market was highlighted throughout the council meeting, with members expressing concern about the potential for shops to inundate neighbourhoods or shady operators to slip into the legal industry.

Councilman Paul Krekorian said illegal pot cultivators threaten to push out businesses in industrial sections of the city's San Fernando Valley. Councilwoman Nury Martinez said she feared the city would fail to sufficiently fund enforcement, leaving rogue operators to flourish.

California is among 29 states where pot is legal, either for medical or recreational use.

Los Angeles has long been an unruly frontier in the pot industry, where hundreds of illegal dispensaries and cultivators proliferated.

Earlier this year, city voters endorsed another attempt to regulate the local pot businesses, leading to the new rules.

The legal marketplace is seen as a way to impose order, hopefully squeezing out illegal operators while raising a cascade of new taxes for City Hall.

In the background is widespread uncertainty about whether the Trump administration will attempt to intervene in states where marijuana is legal.

Because marijuana is illegal in the eyes of the federal government, many major banks are leery to do business with dispensaries and growers, so much of the business is conducted in cash.

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