Three Companies File Lawsuit Against Los Angeles Over Amended Cannabis Regulations
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Three Companies File Lawsuit Against Los Angeles Over Amended Cannabis Regulations

The city tweaked the rules for its cannabis licensing process earlier this summer as part of a separate legal settlement.

September 3, 2020

A new lawsuit filed in federal court alleges that Los Angeles created new issues and inequities when it amended its cannabis regulations as part of a separate legal settlement earlier this summer, according to Law360.

Three companies that share the same founder and that applied for cannabis dispensary licenses in the city—ARMLA One Inc., ARMLA Two Inc. and Gompers SocEq, Inc—filed the lawsuit Aug. 31, claiming that changes to the original rules favored certain social equity applicants over others. The lawsuit also alleges that the city’s Department of Cannabis Regulation and its executive director, Cat Packer, colluded with certain applicants and awarded them licenses even though they had deficiencies in their application or code violations, according to Law360.

The plaintiffs claim that Packer revoked ARMLA One’s winning application because its dispensary would be located too close to a preschool that was set to open, but the preschool had not yet received a license at the time the application was submitted.

The Social Equity Owners and Workers Association and one of its members filed a separate lawsuit in April, arguing that Los Angeles’ licensing process was “flawed." The plaintiffs asked the court to force the city to vet all the dispensary license applications it received under its controversial first-come, first-served process that was initiated last fall.

As part of a settlement agreement, regulators amended the rules for its licensing process, and the lawsuit was dropped.

Among the rule changes were tweaks to narrow the areas designated as most disproportionately impacted by prohibition and a complete revamp of how the next round of dispensary licenses would be issued.

The changes doubled the number of social equity applicants under consideration to 200, but the new lawsuit alleges that the revised rules unfairly benefited the plaintiffs in the previous lawsuit, and claims that the new residency requirements for social equity applicants violate the dormant commerce clause, according to Law360.

The plaintiffs are asking the court to declare the residency requirement unconstitutional, and are also seeking unspecified damages and an injunction that would require regulators to reinstate or reconsider their cannabis retail applications, according to Law360.