CMA Meeting – Recap & Explanations

The room was intimate as Cat Packer sat close to the audience and spoke about the most import issue of the night: Social Equity. Let me remind you, that at the inaugural meeting on July 2nd, Cat Packer explicitly said that Phase 2 licensing, which will open on August 1st, “businesses do not need to have all the documentation for the social equity program or do the pre-inspection. We understand that some of the 12 qualifiers for Phase 2 Temp licensing can’t be done within the 30 day window.” As such, many left that meeting with the idea that the Social Equity Program was put on hold. In other words, that the City would not be asking for anything other than a simple attestation that Phase 2 candidates would participate in the Social Equity Program in order to receive temporary licensing.

However, last night, California Minority Alliance held a talk with Cat Packer to discuss the Social Equity Program. Through Instagram, I asked if, as an incubator, why I would look for a Social Equity applicant to incubate until absolutely necessary. In other words, if by August 1st I do not need to have my Social Equity component figured out (as was said on the July 2nd meeting) then why would I give a Social Equity business 10% of my space? What if the City does not clarify all of the terms of the Social Equity agreement until December… that would mean the incubator is paying for the Social Equity Applicant from August 1st to December with no real gain. Therefore, wouldn’t the DCR’s policy actually hurt the Social Equity Applicants.

Cat Packer specified that all Phase 2 applicants must be part of social equity. An incubator application will NOT be processed until all documentations has been received. In other words, a business will not receive a temporary LA license during Phase 2 until the Social Equity relationship has been established. What Cat Packer meant on July 2nd, to use her words, was to clarify that in the 30 day window you can BEGIN your application. The DCR understands that the 30 days are not sufficient to gather the necessary documents for many people. Thus, the 30 days are just to get your application started. The DCR will then put your application on hold until all documents have been obtained and reviewed. The emphasis here was that, in order to get processed faster, a business should have a Social Equity relationship formed and ready by August 1st.

On the other hand, why would anyone form a partnership without getting further clarification from the DCR? The way the ordinance is worded means that incubators must not only provide space but also licensing assistance, technical assistance, and capital. Cat Packer said she imagined as “the ability to have workshops in communities that were unjustly impacted. Consultants who can provide licensing assistance.” She went on with further examples of what that would be. She finished with, “what does technical assistance look like today? You’re looking at it. And I can’t do this alone.”

Another interesting contrast to previous events has to do with Phase 3 retail licenses. At the fireside chat with Lori Ajax, Cat Packer explained that the 2:1 ration for retail licenses in Phase 3 in Los Angeles meant that for every GENERAL APPLICANT application, they would have to PROCESS (not approve! She clarified) 2 SOCIAL EQUITY APPLICANTS. However, Cat Packer left out an important detail. Perhaps this has to do with the audience of the fireside chat, which was mostly wealthy and white. The CMA meeting is a stark contrast. At the CMA meeting, Cat Packer said that the 155 Pre ICOs count as general applicants. Yup, that’s right. So, she further clarified, that means that the DCR would have to process 310 THREE HUNDRED AND TEN Tier 1 and 2 Social Equity retail applications BEFORE (yes, before) processing or reviewing ANY general applicants.

What does this mean? In layman terms, it means that the chances of getting a retail license as a general applicant are almost 0. In previous emails I’ve sent, I’ve already explained this. If there are 155 Pre ICOs + 310 Social Equity Retailers = 465 total retail licenses (assuming the social equity applicants get approved). That’s 65 licenses over the total amount the City has put a soft-cap on – 400. It’ll be interesting to see how this plays out, if it does in this manner.

At this point, I’d like to give a disclaimer that 1) documents needed for Phase 2 licensing will come out July 18th and 2) we do not know how the DCR will process retail licenses for Phase 3 at this time as it’s not fully clear.

I hope you find these emails helpful and informative. My goal is to provide you with trust and guidance in this industry. I appreciate all the positive feedback I’ve received.
Best regards,

Sergio Ingstrom
Senior Consultant