City of Los Angeles Proposition M

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City of Los Angeles Proposition M

In March 2017, the citizens of the city of Los Angeles resounding voted for Proposition M, which  gave the Los Angeles Mayor and City Council the authority to regulate commercial cannabis  businesses in the City of Los Angeles.  

Since the passage of the previous regulations under Proposition D (2013), the City’s Attorney’s office has initiated over 1,700  criminal filings against individuals and entities regarding non-immunized cannabis businesses and shut down over 800 non immunized medical cannabis businesses. However, despite this aggressive enforcement of Prop D, an unknown number of  medical cannabis business, including growers, delivery apps, and delivery service continued to open, close, and reopen in Los  Angeles, with no regulatory authorization from the City. 

In March 2017, Los Angeles citizens voted for the approval of cannabis regulation known as Proposition M. Proposition M  gave the Los Angeles Mayor and City Council comprehensive oversight of commercial cannabis in an effort to clean up years  of convoluted regulations, sporadic enforcement and an often-adversarial relationship between the cannabis industry and the  City of Los Angeles 

Note from Bruce:  

If your business has not been in compliance since 2007, it does not qualify for immunity from the ban as a Pre-ICO. Licenses for Pre-ICOs have already been issued and are no longer available. However, the City of L.A. will provide applications  for new dispensaries (medical and adult use) and numerous other marijuana business licenses in the near future. Feel free to  call Bruce Margolin ESQ for a consultation NOW regarding what the qualifications are and how to be ready to obtain  licensing as soon as the applications are released. 

Under Prop. M, the City of LA’s marijuana businesses underwent major taxation and regulatory reform.  Below are only some of the signifcant portions of Prop M: 

TAXATION 

Proposition M’s tax rates call for medical cannabis businesses to only pay 5% for every $1,000 earned. Recreational businesses  would pay tax based upon the type of business with taxes mostly in the range of 1-2% per $1,000 earned for most businesses,  including cultivators and manufacturers, and 10% per $1,000 for dispensaries.  

The Proposition also allows businesses to pay their taxes in cash until better banking solutions can be achieved. Proposition  M also addresses a common misunderstanding that many businesses under Prop D have encountered by making it clear that  while taxes must be paid, simply paying taxes does not mean the business is “licensed” to operate (even if you have BTRC).  In addition, it makes it a misdemeanor for any person operating a non-medicinal cannabis business to display an improper,  expired, suspended, or unauthorized tax and/or license certificates. 

REGULATION 

Under Proposition M, it is unlawful to own, set up or operate a medical and/or non-medicinal cannabis business without a city  issued license, permit or authorization. Proposition M provides the City of Los Angeles with the clear ability to enforce these  regulations, including banning all unlicensed operations as of January 1, 2018 and permitting penalties against the businesses  and individuals operating without a license. In addition, Proposition M allows the Department of Water and Power to shut down  utility services if a business or individual is in violation of the ordinance. (Section SEC .45.19.7.3) 

BE AWARE!! Landlords, Employees & Volunteers (Including Bud Tenders) ! 

Proposition M includes penalties to employees, contractors, agents and volunteers of the unauthorized  businesses, as well as landlords who lease, rent or otherwise allow the establishment to occupy a portion of land. 

Any person in violation of this law shall be guilty of a misdemeanor punishable by a fine of not more than $1,000, imprisonment  of up to six months, or both, and may as well become ineligible to obtain a cannabis business license. 

In addition, once an injunction has been placed on the unauthorized business, each day the unauthorized business continues  to operate shall be deemed as a new an separate offense and subject to a maximum civil penalty of $20,00 for each and  every offense.  

Note from Bruce:  

Even though I’ve successfully defended numerous persons accused of City of LA Cannabis business violations, nevertheless if  you’re not in compliance with Prop M Close Down Immediately to avoid prosecution from violation and/or injunction.  Call my office for a consultation if you have any questions or concerns.

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