Audit says L.A. took ‘reasonable’ steps to prevent unfairness in cannabis licensing

A newly released audit found that although some cannabis entrepreneurs got into Los Angeles’ application system ahead of time, the city took “reasonable and appropriate” steps to prevent them from having any unfair advantage.

An L.A. official is recommending, in light of those findings, that the Department of Cannabis Regulation press forward with processing and awarding licenses for new retailers, which had been suspended last year amid concerns about fairness.

Auditors found that the department “conducted the process in good faith and found no evidence of bias or unfairness,” City Administrative Officer Richard Llewellyn wrote in a summary of the report, concluding that the department should be directed to “commence the necessary work” to continue the licensing process.

The Department of Cannabis Regulation said it was preparing recommendations on how to process such applications, aiming to make “reasonable and practical reforms” to its procedures and “establish a more equitable path forward.”

Although the audit found the process was “fair and reasonable, it still remains true that the process itself, and the overall and underlying policy, can be improved,” department head Cat Packer said in a statement.

The audit and its findings met with sharply mixed reactions from cannabis applicants and advocates, some of whom want the city to press forward with licensing, others who want the city to overhaul or reopen the process.

The audit, called for last year by Mayor Eric Garcetti and other officials and conducted by Sjoberg Evashenk Consulting, scrutinized the hotly contested process to snap up a limited number of new licenses for pot shops in Los Angeles.

Hundreds of cannabis entrepreneurs rushed to turn in their applications in September, but only 100 licenses were expected to be awarded through a first-come, first-served process that hinged heavily on who submitted their applications fastest. Mere seconds made the difference in whether someone had a shot at a coveted license.

When marijuana entrepreneurs discovered that some applicants had gotten into the application system before its official launch time of 10 a.m., they argued that the process had been tainted. Furious applicants packed meetings at City Hall.

The Department of Cannabis Regulation said it had “normalized” the early applications — pushing them back in line to where they would have been if they were started at 10 a.m. — to prevent them from having an unfair edge.

The audit found that was a “reasonable and appropriate” approach to fixing the problem.

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