California approved a plan to provide $100 million to boost its legal marijuana industry. While sales have remained steady, many retailers have been suffering, stifled by a mix of local regulations and fees, and competition from unlicensed pot shops.
The state legislature approved the grant funding Monday for cities and counties, hoping to help existing cannabis businesses convert temporary licenses into permanent ones, according to the Los Angeles Times. Licenses have to be renewed each year.
Los Angeles will receive $22 million of the funding, according to the report. Long Beach, San Francisco, and Oakland are among 17 other cities that are set to receive funds.
The state set a path to formal licensing when voters approved Proposition 64 in 2016, which regulates and taxes marijuana use. Officials expected to grant licenses to 6,000 pot shops in the first few years, but only about 1,000 have been issued for retail and delivery firms.
Los Angeles has tried to crack down on the many illegal retail dispensaries that have flowered in recent years. In 2019, the city had more illegal shops than licensed ones, because of the cost burden of following city regulations and obtaining licenses.
With the new grant funding, cities and counties can hire experts to help businesses move through the licensing process, the report noted.
Unlicensed cannabis shops also pose issues for brokers and landlords. In L.A., the city sued two brokers at Daum commercial brokerage in 2019, saying the pair arranged a lease to an unlicensed pot shop in Central Alameda. The judge eventually dismissed the suit.
Gov. Gavin Newsom is also considering whether to give cannabis businesses an additional six months to transition to permanent licenses. Businesses currently have until Jan. 1, 2022, to comply with state environmental laws.
Many marijuana businesses could shut down if they don’t obtain a permanent license before the deadline and aren’t supported through the process with the new state grants. Closed businesses would hit the retail sector hard, as marijuana sales have remained steady throughout the country during the pandemic.
[LAT] — Isabella Farr