This past Tuesday, residents of Los Angeles passed Measure M with nearly 80 percent of the vote. The bill titled Cannabis Regulation After Citizen Input, Taxation, and Enforcement establishes the basic framework for LA’s emerging cannabis industry. Los Angeles already has a medical market worth close to $1 billion, and with the passage of California’s Proposition 64, the city is slated to become the “Cannabis Capital” of the United States.
In order for Los Angeles to move forward with this burgeoning industry, clear regulations need to be established. For one, the city hasn’t had a way to license new medical cannabis dispensaries since 2007, nor did they have any clear power to enforce regulations (which were confusing at best, nonexistent at worst). So, with the intention of “smart and sensible regulations, licensing mechanisms and enforcement,” groups such as the Southern California Coalition (SCC), Los Angeles Cannabis Task Force, Weedmaps and others joined forces with the LA City Council to draft a proposition that would focus on these issues in a collective manner.
What they came up with is Measure M, which directly addresses taxation and enforcement while instituting a community-oriented approach for regulation development. The measure stipulates citizen input by declaring, “the Council shall convene public hearings in the city involving all stakeholders in the process for developing the rules, regulations, and ordinances necessary to regulate the safe commercialization of cannabis.” This means Los Angeles constituents, cannabis-related industries, neighborhood councils, law enforcement, school officials, civic and service organizations, chambers of commerce, probation officers and others will all be included in the process. Once those regulations are established—expected sometime after September 2017—the City Council will have the authority to regulate all levels of the cannabis industry, including the ability to adjust, repeal and add new regulations as needed without going to the ballot each time.
Los Angeles City Council President Herb Wesson commented, “The passing of Proposition M is a great victory for common sense, law enforcement and all Angelenos. We gave communities a voice in the process, and their voices will be continued to be heard. This measure is what responsible marijuana laws should look like, and we couldn’t be prouder of our city.”
An opposing proposition, Measure N, was also on the ballot, but its original supporters abandoned it in favor of the more encompassing and flexible Measure M. The main difference between the two is Measure N was drafted by a coalition of existing medical dispensaries which favored existing shops while also establishing detailed regulations for the industry. Measure N remained on the ballot and was rejected by voters.
What Will Change
Measure M will essentially replace Proposition D, which was passed by Los Angeles voters in 2013. Detractors of Prop D have criticized it for its regulatory gray areas. First, it limited the number of medical dispensaries in LA to 135, but it didn’t explicitly permit those dispensaries to operate, it simply said the city would not prosecute them. So as these 135 dispensaries operated with “limited legal immunity,” hundreds of non-immunized medical cannabis businesses were shut down, but hundreds more reopened in their stead with no regulatory authorization from the city.
Measure M will give the city power to fully permit those 135 medical dispensaries already in compliance with Prop D, and they will have priority in the processing of applications. The city also committed to placing no cap on the number of cannabis licenses issued; instead, they will rely on a zoning-based approach. Delivery services, which were previously banned under Prop D, will most likely be allowed. Though Measure M did not overtly authorize delivery services, it does give the city power to “issue permits for cannabis activity,” which can be expanded to include delivery.
New business taxes established by Measure M (effective at the start of 2018) will include a gross tax of 10 percent for recreational cannabis sales, as well as a one to two percent tax for companies involved in cannabis cultivation, manufacturing, transportation, testing and research. Measure M also reduces the gross tax of medical cannabis sales to 5 percent, down from the current 6 percent. How much this will affect the consumer is unclear at this point. Cannabis shops may choose to pass this cost to the consumer or they may not.
For those businesses who do not comply regulations, Measure M will establish enforcement protocols, such as criminal and civil penalties for businesses who violate the new cannabis regulations, including authorization of the Department of Water and Power to shut off utilities in non-compliant cannabis shops.
Equality in the Industry
An especially provocative part of Measure M is its aim to ensure diversity within this new, lucrative economic sector by mandating minority-owned business must be included among the licensees, stating the public hearings shall include consideration and resolution considering “historical issues of social equality and social justice relations to the commercialization of cannabis.”
This goes hand in hand with the language of Proposition 64, which will allow people with prior drug convictions to enter the cannabis market. This means those penalized by the failed drug war (historically and disproportionately people of color), will have equal opportunity when the city begins to issue licenses. “We’re not letting that be an afterthought,” says Virgil Grant, president and co-founder of the aforementioned SCC. “Tonight, we celebrate a measure that protects communities, and doesn’t leave anyone behind.”
If Los Angeles does indeed become the “Cannabis Capital,” Measure M can serve as an example for other cities and states in the midst of developing practical regulations for their own budding cannabis industries. Grant comments, “This measure is evidence that when we listen and work together, we can solve issues, find common ground and benefit our communities and citizens in the process [...] Our plan is to take Proposition M’s framework to Los Angeles County next, to Sacramento and beyond, so that this comprehensive approach can serve as a model for cities, states and the entire country.”