Last year, when the city of Los Angeles allowed retail cannabis owners to look beyond their community plan areas for storefronts, Drew was optimistic that it would help her find a space where she could finally open. She worked with brokers and personally called dozens of property owners. Her search turned up a number of serviceable locations, but not a single owner willing to rent to her.
The real sticking point, it seems, is still unwilling landlords.
“People don’t realize the numbers for the community plan areas, those are all hypothetical,” said Drew, who is the CEO of cannabis brand Biko. “You could have 10 available slots in Bel Air, but if you don’t have one owner in Bel Air willing to rent to cannabis, you have zero slots in Bel Air.”
Real estate has been a hurdle for cannabis operators since recreational marijuana use was legalized in California. Last year, the city of Los Angeles approved an adjustment aimed at making it easier for cannabis retail license holders to find suitable space — a major challenge since they must be certain distances away from sensitive uses including schools, daycares and parks.
But the tweak, which opened up a wider swath of the city to those looking for a possible storefront, wasn’t the panacea many were hoping for.
“A lot of my clients thought that this would be a savior for their business, that they could relocate it, and that outside of their community plan area, they have all of LA to pick from, and they were going to find this awesome space” Greenberg Glusker attorney Alexa Steinberg said. “And that just really wasn’t the case for a lot of my clients.”
When would-be retail licensees apply to the city, they must first secure a property to locate their business. An approved license is attached to that property, and if the business wanted to relocate to a storefront with better foot traffic or a more reasonable rent, it was previously required to find a space in the same community plan area.
The 2023 adjustment allowed retail license holders to look in other parts of the city that hadn’t yet reached capacity for cannabis retail operations.
Many of Steinberg’s clients went “on a wild goose chase” for available, compliant space once they were allowed to move outside their community plan areas, she said. But her clients’ real estate searches turned up the same results: a dearth of compliant spaces and landlords that didn’t want to rent to them or would take them as tenants only at rents multiples above market rate, Steinberg said.
