Social Equity Program

Social Equity LA is a social enterprise that provides economic development and opportunities for under-represented individuals and communities. Social Equity LA promotes Access, Inclusion and Diversity in the cannabis industry.

Social Equity LA provides support and resources if you qualify for the City of Los Angeles Social Equity Program. Please email us at info@socialequityla.com for one-on-one assistance.

 

City of Los Angeles Social Equity Program

Purpose and Intent:

“Promoting equitable ownership and employment opportunities in the cannabis industry in order to decrease disparities in life outcomes for marginalized communities and to address the disproportionate impacts of the war on drugs in those communities.”
The mission of LA’s Social Equity Program is to create new life outcomes for people who were negatively impacted by the failed War on Drugs.

GENERAL INFO ON SOCIAL EQUITY PROGRAM

Social Equity Program Overview

Cannabis criminalization and its enforcement has had long-term, adverse impacts to the City of Los Angeles, particularly for low income and minority community members.

The City of Los Angeles is one of the few jurisdictions in the United States attempting to address the impacts of past cannabis policies and their inequities by developing and implementing cannabis policies that seek to center equity in cannabis policy reform.

The Social Equity Program (SEP) is one tool the City of Los Angeles is using to begin to acknowledge and repair the harm caused by the War on Drugs and the disparate enforcement of cannabis prohibition. The goal of the Social Equity Program is, “to promote equitable ownership and employment opportunities in the cannabis industry in order to decrease disparities in life outcomes for marginalized communities, and to address the disproportionate impacts of the War on Drugs in those communities.”

After conducting a Social Equity Analysis to both review the impacts associated with cannabis criminalization and to identify ways to eliminate barriers to entering the legal cannabis market by those individuals and communities disproportionately impacted by the War on Drugs, the City identified that individuals with past cannabis arrests and/or convictions, and those that were low income and lived in high arrest communities or “Disproportionately Impacted Areas” experienced the brunt of societal harms associated with cannabis criminalization.

As such, individuals who are low income, have past cannabis arrests and or convictions and those that live in Disproportionately Impacted Areas may qualify to participate in the City’s Social Equity Program. This Program aims to support people impacted by the War on Drugs and seeks to reduce barriers to entering the legal cannabis industry by providing a number of programs to support business ownership and employment opportunities.

For those interested in owning and operating a licensed cannabis business, priority application processing is available, which seeks to afford eligible SEP applicants an opportunity to be first-to-market, which is critically important given the City’s limited number of available licenses. Furthermore, the SEP provides applicants technical and business assistance to assist in navigating City’s cannabis licensing process. Similarly, SEP applicants may qualify for fee deferrals and have the opportunity to participate in programming designed for new or first-time business owners to help them learn the ‘ins and outs’ of operating a licensed and compliant cannabis business in Los Angeles.

The Social Equity Program will also support workforce development and job placement for those who are interested in employment opportunities rather than business licensing.

As the lead agency for licensing and regulating cannabis in the City of Los Angeles, the Department of Cannabis Regulation (DCR) is responsible for implementing the Social Equity Program and seeks to ensure that disproportionately impacted individuals and communities in the City have fair and meaningful access to the new economic opportunities afforded by legalization and the commercialization of the local cannabis industry.

Please check our website regularly for more information and updates related to the Social Equity Program and its implementation.

Who qualifies for the Social Equity Program?

The Social Equity Program is divided between Tier 1, Tier 2, and Tier 3 Social Equity Applicants.

A Tier 1 Social Equity Applicant shall own no less than a 51 percent equity share of the business that would benefit from the issuance of the License and meet the following criteria at time of applying for a License:
1. Low Income and prior California Cannabis Arrest or Conviction; or
2. Low Income and a minimum of five years cumulative residency in a Disproportionately Impacted Area.

A Tier 2 Social Equity Applicant shall own no less than a 33 1/3 percent equity share of the business that would benefit from the issuance of the License and meet the following criteria at time of applying for a License:

1. Low Income and a minimum of five years cumulative residency in a Disproportionately Impacted Area; or
2. a minimum of 10 years cumulative residency in a Disproportionately Impacted Area.

A Tier 3 Social Equity Applicant shall enter into a Social Equity Agreement with the City to provide capital, leased space, business, licensing and compliance assistance for a period of three years to Persons who meet the criteria to be a Tier 1 Social Equity Applicant, and business, licensing and compliance assistance for a period of three years to Persons who meet the criteria to be a Tier 2 Social Equity Applicant. A Tier 3 Social Equity Applicant shall also provide Tier 1 Social Equity Applicants access to property with no rent and with prorated utilities for a minimum of three years in a manner consistent with LAMC Sec. 104.20(e)

What does Low Income mean?
As defined in LAMC Sec. 104.20, Low Income means 80 percent or below of Area Median Income for the City based on the 2016 American Community Survey and updated with each decennial census.

How do I prove I am Low Income?

You must provide evidence of your income for the 12-month period preceding the date of your application. Please view this Eligibility Requirement document for more information of the type of evidence to submit.

What types of prior cannabis-related arrests or conviction qualify an applicant for Tier 1 status?

An applicant who is Low Income and has a California Cannabis Arrest or Conviction will qualify for Tier 1 status (provided all other eligibility requirements, including equity requirements, are met). A California Cannabis Arrest or Conviction means an arrest or conviction in California for any crime under the laws of the State of California or the United States relating to the sale, possession, use, manufacture, or cultivation of cannabis that occurred prior to November 8, 2016. An arrest, prosecution or conviction for a violation of Proposition D, as codified in former Article 5.1 of Chapter IV of the Los Angeles Municipal Code, notwithstanding that Proposition D has been repealed, is not a California Cannabis Arrest or Conviction.

How do I prove I have a California Cannabis Arrest or Conviction?

Please view this Eligibility Requirement document for more information of the type of evidence to submit.

If I have a California Cannabis Arrest or Conviction and a non-cannabis-related conviction, can I still qualify for the Tier 1 status?

Even if you have a California Cannabis Arrest or Conviction, you may still be ineligible to apply for any License, as a Social Equity or non-Social Equity Applicant, if you have certain criminal convictions, including those involving violent or serious felonies. Please refer to LAMC Section 104.03(c) for a list of disqualifying convictions and time periods in which those convictions are disqualifying.

What is a Disproportionately Impacted Area?

A “Disproportionately Impacted Area” means an eligible zip code based on the “More Inclusive Option” as described on page 23 of the “Cannabis Social Equity Analysis Report” commissioned by the City in 2017, and referenced in Regulation No. 13 of the Rules and Regulations, or as established using similar criteria in an analysis provided by an Applicant for an area outside of the City.

How long did I have to reside in a Disproportionately Impacted Area (DIA) to qualify for Tier 1 or Tier 2 status?

An individual will satisfy the residency requirement for Tier 1 status if he or she is Low Income and has a minimum of five years cumulative residency in a DIA, and an individual will satisfy the residency requirement for Tier 2 status if he or she is Low Income and has a minimum of five years cumulative residency in a DIA or if he or she has a minimum of ten years cumulative residency in a DIA.

Did I have to live in a DIA for 5 or 10 consecutive years?

An individual will satisfy the residency requirement if he or she can prove that he or she has resided in a DIA in total for at least five or ten years (consecutive or nonconsecutive).

Do I have to currently reside in a DIA to qualify for Tier 1 or Tier 2 status?

No, an applicant only has to have been a resident in a DIA for 5 or 10 years at some point in time.

I am a City resident but I have not lived in any of the zip codes designated as a DIA in the City’s Social Equity Analysis Report.  Is there any way for me to prove I’ve lived in a DIA in the City?

If a zip code in the City was not designated as a DIA in the City’s Social Equity Analysis Report, then residency in that zip code will not satisfy the residency requirement for Tier 1 or Tier 2 status.

I live outside of the City and believe my neighborhood was disproportionately impacted by the war on drugs. How can I qualify for Tier 1 or Tier 2 status?

An applicant who is Low Income can satisfy the residency requirement for Tier 1 or Tier 2 status if they establish that they resided for a sufficient period of time in a zip code outside of the City that was disproportionately impacted by the war drugs. To do so, an applicant must provide to DCR an analysis using similar criteria employed by the City in its Cannabis Social Equity Analysis Report, which can be found here.

What benefits does a Social Equity Applicant receive?

A Tier 1 Social Equity Applicant shall receive the following benefits: 1. business, licensing and compliance assistance; 2. expedited renewal processing; 3. program site specific conditions; 4. the potential for fee deferrals if the City Council adopts a fee deferral program; and 5. access to an Industry Investment Fund if established.

A Tier 2 Social Equity Applicant shall enter into a Social Equity Agreement with the City to provide business, licensing and compliance assistance to Tier 1 Social Equity Program participants. A Tier 2 Social Equity Applicant shall receive the following benefits: 1. business, licensing and compliance assistance; 2. expedited renewal processing; and 3. program site specific conditions.

A Tier 3 Social Equity Applicant shall receive the following benefits: 1. expedited renewal processing; and 2. program site specific conditions.

Additionally, Tier 1 and Tier 2 Social Equity Applicants shall receive priority processing for Retailer Commercial Cannabis Activity Licenses (Types 9 and 10) and for Microbusiness Commercial Cannabis Activity Licenses that include retail (Type 12) on a 2:1 ratio with all non-Social Equity Applicants (including Applicants issued Licenses pursuant to Section 104.07).

Tiers 1 through 3 Social Equity Applicants shall receive priority processing for all non-retail License types on a 1:1 ratio with all non-Social Equity Applicants (excluding Applicants issued Licenses pursuant to Section 104.08) based on License type category, provided that Tier 1 Social Equity Applicants shall receive priority over Tier 2 and Tier 3 Social Equity Applicants, and Tier 2 Social Equity Applicants shall receive priority over Tier 3 Social Equity Applicants.

Does a Tier 1 or Tier 2 have to have a business premises secured before submitting an application?

No. A Tier 1 or Tier 2 may submit an application before identifying a business premises.  However, DCR will not issue Temporary Approval or a License to such an applicant before a compliant business premises is identified and passes a pre-license inspection.

Does a Tier 3 have to provide free space to a Tier 2?

No, a Tier 3 does not have to provide a Tier 2 access to property, although it is free to do so.  A Tier 3 must provide business, licensing and compliance assistance for three years to a Tier 2.

Can a Tier 3 support a Tier 1 engaged in a different Commercial Cannabis Activity, e.g., a Tier 3 Manufacturer supporting a Tier 1 Cultivator?

A Tier 3 may support a Tier 1 and/or Tier 2 that will engage in a different type of Commercial Cannabis Activity than the Tier 3.

If a Tier 3 applies for multiple licenses, does it have to provide access to property to a different Tier 1 for each of license, or can it just provide access to property to one Tier 1?

A Tier 3 with multiple licenses may provide access to property to the same Tier 1 to satisfy the Social Equity requirements for each License.  But the Tier 3 must provide the Tier 1 the total amount of property access required for all of the Tier 3’s Licenses. For example, a Tier 3 with one Cultivation License and one Manufacturing License would have to provide a Tier 1 with at least 1300 sq ft of property or 10% of each Licensed Business Premises, whichever is greater.

Can a Tier 1 or Tier 2 have partners or investors who do not qualify as a Tier 1s or Tier 2s?

A Tier 1 and Tier 2 must own no less than 51 percent and 33 1/3 percent, respectively, of the business that would benefit from issuance of the License. As long as that requirement is met, a Tier 1 or Tier 2 may have partners or investors who do not qualify as Tier 1s or Tier 2s, subject to any other ownership restrictions.

1. Low Income

2. California Cannabis Conviction
3. Disproportionately Impacted Area
Low Income
Low Income is defined as income 80% or below the Area Median Income. According to the 2016 Survey, the Area Median Household income was $51,538. To qualify as a low income Tier 1 SEP Applicant, you must be able to prove that you earn 41,230 per year or less.

California Cannabis Conviction
California Cannabis Conviction refers to a cannabis-related crime that occurred prior to November 8, 2016, and could be classified as a citation or misdemeanor under current California law.

Disproportionately Impacted Area
Disproportionately Impacted Area refers to specific zip codes which have an unusually high rate of cannabis convictions. To qualify under Tier 1, an SEP applicant must have lived in any of the following zip codes for a total of at least 5 years, or at least 10 years to qualify for Tier 2.
For additional information contact us or visit the DRC’s Special Equity Program page