Excessive permit fees and bureaucracy are pushing cannabis entrepreneurs who were directly impacted by the War on Drugs out of the legal market in the city of Los Angeles, and in some cases, back into the illicit market.
“We were told that the social equity program would help those harmed by the War on Drugs. Instead, we’ve been trapped in a bureaucratic maze of broken systems, delayed grants, and rising fees,” Brandon Brinson, founder of The Green Paradise dispensary, told the city council’s Government Operations Committee during public comment on Wednesday morning.
“I’m so sick of this shit. And then y’all gonna get up here and act like y’all done did something. Y’all ain't done shit for us. Nothing!” Brison yelled.
Launched shortly after recreational cannabis was legalized, the city’s Social Equity Program was designed to be a “restorative justice tool” to help people directly impacted by the War On Drugs with various financial, legal, and business resources.
But some social equity licensees say that the program has largely been a failure.
“As a Social Equity licensee, I’ve experienced long stretches of silence waiting for updates, invoices, or even basic communication from DCR,” Luis Rivera, the founder and executive director of Social Equity L.A., a non-profit that advocates for advancing social equity and economic empowerment in Los Angeles, wrote to the committee.
“These delays have cost me real money and forced me to walk away from opportunities I couldn’t afford to wait on,” Rivera said. “Meanwhile, the department continues to move at a glacial pace, with no accountability to the people most impacted by its delays.”
While the DCR has increased its staff and salaries and seen its total budget grow, social equity licensees like Rivera say they are “still waiting for answers.”
“What we’ve seen is not improved services, but more layers of bureaucracy,” Rivera told the committee.
“The DCR, with all due respect … is a joke,” Elliot Lewis, CEO of Catalyst Cannabis Co., told the committee during public comment.
Speaking in solidarity with social equity licensees, Lewis said the DCR has “done nothing to earn the tax money of this industry. The [social equity] program is an abject failure.”
Making matters worse for business owners, the city’s Department of Cannabis Regulation (DCR) now wants to increase some licensing fees, which are already costing business owners tens of thousands of dollars annually.
In a 2024 report filed with the city council’s Government Operations Committee, the DCR contends that it must raise fees for the first time since 2020 to make up for a significant budget deficit.
“If the fees are not adopted as recommended it will result in a general fund deficit for the office of finance, the city attorney, the personnel department and others, which are not currently contemplated in the budget,” Jason Killeen, the assistant executive director for the DCR told the Government Operations Committee on Wednesday.
During the tense and at times awkward exchange between representatives from the DCR and the committee, Committee Chair Councilmember Imelda Padilla questioned why the DCR needs to increase fees now, given that the fees have remained the same for the past five years.
In his response to Padilla, Killeen explained that the department has maintained vacancies between 10 and 50 percent to make up for a gap in funding, in addition to also utilizing grant funds to pay for staff salaries.
One of the grants that they received was the Department of Cannabis Control’s (DCC) Local Jurisdiction Assistance Grant.
In 2022, the city of Los Angeles was awarded more than $22 million by the DCC to assist businesses in transitioning from temporary state licenses to annual licenses. The funding was part of a one-time, $100 million grant intended to help “small, legacy, and [social] equity businesses.”
“The reason we were able to last this long without raising fees is because we received that $22 million grant award in 2022,” DCR’s Administration and Community Engagement Division Chief Zachary De Corse told the committee. “That funding was anticipated to cover the next two and a half years of application fees and a variety of other fees. That was the original grant agreement; that’s what it was intended to do.”
However, things didn’t go as planned, and two years after receiving the grant, the DCR learned that over $10 million in funding could not be used for annual application fees, as they had originally hoped.
“Unfortunately, we learned from the state last year that they were disallowing significant portions of those fees, most specifically the annual application fee,” De Corse explained.
“I’m here today not just as a business owner but as a survivor of a failed promise,” social equity licensee Evelyn Brinson told the city council’s Government Operations Committee during public comment. “We were told the Local Jurisdiction Assistance Grant would remove financial barriers for operators like me. But instead, the Department of Cannabis Regulation took $22 million dollars meant to support us and turned it into a fucking fee trap.”
Brison told committee members that she was billed nearly $20,000 in environmental and annual renewal fees after the DCR used state funds to cover the salaries of its staff. “This is not equity,” Brison yelled.
Because the DCR has already used part of the grant to pay for salaries and other costs, the DCR is now facing a budget deficit if it returns the $10.5 million to the state, according to De Corse. “So that’s the main issue, because we weren’t allowed to waive those fees per the original grant agreements, there is a deficit now created,” De Corse told the committee.
“Well, how did you mess that up?” Councilmember Padilla questioned, as people present at the meeting applauded her. “Like, how did you not know what it was supposed to be used for?”
“It wasn’t messed up,” Killeen countered. According to the assistant executive director of the DCR, the state is responsible for the misunderstanding, not the city.
Killeen explained to the committee that an audit of the state’s grant program, after it launched, revealed that their grant coordinator had not read the grant agreements before they signed off on them. As a result, the DCC “basically disallowed all the grant agreements and they required jurisdictions to come back,” according to Killeen.
The meeting ended on a positive note for concerned legal cannabis business owners.
Towards the end of the hour-long committee meeting, Padilla asked the DCR to include additional information in their study and report back to the Government Operations Committee at the next meeting, before the committee takes a vote on increasing fees.
The discussion ended with a round of applause from the crowd.
You can watch the full meeting below.
