Social Equity Reform and Market Stabilization Motion

The City of Los Angeles established its Social Equity Program in 2017 in response to the systemic harm caused by the War on Drugs. The program was intended to provide reparative, equity-centered support for cannabis entrepreneurs from historically criminalized communities. The foundational Social Equity Analysis Report explicitly recommended the program be modeled after the federal Small Business Administration’s Mentor-Protégé Program, which focuses on long-term development through mentorship, business incubation, and equitable market access.

However, since its inception, the Department of Cannabis Regulation (DCR) has administered the Social Equity Program as a traditional regulatory licensing function, failing to implement the program as a dedicated, reparative economic development initiative. The lack of structural distinction between general licensing and equity support has resulted in widespread delays, inequitable outcomes, and an erosion of the program’s original purpose.

Additionally, the current program is set to sunset in 2026, despite the State of California’s passage of SB 51, which extends provisional licensing for equity operators through 2031. Without alignment, this discrepancy will create policy confusion and threaten the long-term viability of equity retailers in Los Angeles.

Social Equity operators who have managed to open face severe tax debt incurred during years of city-imposed delays and market instability. Unchecked proliferation of illegal operators, especially in historically over-policed areas like South Los Angeles, has further destabilized the legal market and placed equity businesses at risk. These conditions were exacerbated by a lack of enforcement and failure to hold landlords accountable for knowingly leasing to illegal cannabis entities.

In recognition of these systemic issues, and in alignment with proven best practices from other California jurisdictions such as Oakland, the City must act urgently to restructure the program, support current operators, and establish mechanisms that ensure long-term sustainability and restorative justice.

I THEREFORE MOVE that the City Council:

1. Disband the current administration of the Social Equity Program under the Department of Cannabis Regulation (DCR) and transfer all Social Equity responsibilities to the Department of Economic Development, where the program shall be operated as a dedicated economic equity initiative, modeled after the SBA Mentor-Protégé Program, including contract vetting, technical assistance, and real estate support.

2. Extend the Social Equity Program through the year 2031 to align with the State of California’s provisional licensing extension under SB 51, ensuring continuity of support and programmatic development.

3. Instruct the Office of Finance and the Department of Economic Development to develop a Social Equity Tax Reconciliation and Remediation Program to provide redress for tax liabilities incurred due to licensing delays, systemic barriers, and unregulated market encroachment. This program may include debt forgiveness, structured relief plans, or credits, and should be considered a form of programmatic redress.

4. Instruct the Chief Legislative Analyst and Office of Finance, in consultation with the Department of Economic Development and cannabis stakeholders, to propose and implement a tiered cannabis tax structure, effective July 1, 2025, with reduced tax obligations for small, community-based, and verified Social Equity businesses, modeled after the City of Oakland’s incremental tax approach.

5. Reinstitute the Cannabis Enforcement Task Force as an interdepartmental body coordinated by the Department of Economic Development and staffed by the Los Angeles Police Department, Office of Finance, Department of Building and Safety, Department of City Planning, and the Office of the City Attorney. The task force shall prioritize enforcement against illegal cannabis operations and protect compliant operators.

6. Reaffirm support for the enforcement of Los Angeles Municipal Code provisions authorizing fines of up to $20,000 per day against landlords who knowingly lease to unlicensed cannabis businesses, and direct all relevant departments to coordinate an enforcement strategy and report back within 60 days with implementation plans, fiscal impact assessments, and necessary ordinance amendments.

PRESENTED BY:

Councilmember Curren D. Price, Jr.

9th District