Homeless housing expansion in L.A. shrinking map for zoned cannabis retail

April 7, 2023 · MJ Biz Daily

A large-scale initiative to house the homeless in Los Angeles is bumping up against efforts to give social equity license holders and other retailers a greater role in the city’s cannabis industry.

In particular, L.A. Mayor Karen Bass’ plan to build and retrofit thousands of single-family homes and multifamily units for the homeless is creating new obstacles for marijuana retailers and entrepreneurs searching for property in one of the nation’s priciest real estate markets.

Such dwellings – known as Permanent Supportive Housing (PSH) properties – are considered one of several “sensitive uses” under L.A. zoning laws.

Cannabis stores are barred from operating within a 700-foot radius of such properties.

And with so many marijuana retail operators and applicants in L.A. a part of the city’s social equity program, this real estate predicament is pinning one disadvantaged constituency against another.

New build-outs and municipal-owned property conversions – which include vacated buildings such as libraries – are all part of the mayor’s planned housing mix for the homeless.

“As Karen Bass creates sustainable housing for this population, that continues to push cannabis retail in particular out of the market,” said Alexa Steinberg, counsel at L.A.-based law firm Greenberg Glusker, which represents retail lottery license winners and applicants.

Finding a property – and a landlord willing to lease it and work with operators throughout the application process – is challenging enough, Steinberg said.

“Putting in supportive housing all over the city takes away a percentage of those landlords that were willing to lease to these businesses,” she added.

“So now you’ve got an even narrower market.”

Emergency measures

The homeless population in L.A. has nearly doubled in the past decade, with 42,000 living on city streets at any given time, according to estimates.

Generational homelessness is common on Skid Row downtown and in other parts of the city, including South L.A. and Hollywood.

Bass, a Democrat and former member of Congress, campaigned on affordable housing and homeless-shelter expansion in last November’s mayoral election.

In her first act in office in mid-December, L.A.’s first female mayor declared a state of emergency on homelessness, expediting building contracts while minimizing red tape for permanent and temporary housing initiatives.

Her “Inside Safe” program has already cleared six homeless encampments, securing temporary shelter at hotels for more than 250 people living in tents, according to city releases and media reports.

In her first year as mayor, Bass aims to house 17,000 homeless Angelinos.

As L.A.’s homeless crisis has worsened, real estate market values have increased, pricing more residents out of their homes, according to city insider Solomon Rivera.

“People being priced out is very much related to the houseless crisis,” said Rivera, chief of staff for Councilor Marqueece Harris-Dawson, one of the cannabis industry’s top advocates at city hall.

“It’s just so expensive here.”

Meanwhile, the city’s Department of Cannabis Regulation has been trying to strike some compromise regarding sensitive-use zoning.

“Los Angeles is an ever-evolving city, constantly changing and growing with new challenges every day,” said Michelle Garakian, the DCR’s interim executive director.

“DCR looks forward to working with Mayor Bass and the City Council to support this top priority while continuing to problem-solve challenges facing our emerging cannabis industry.”

A guessing game 

According to the Housing Authority of the City of Los Angeles, the agency has provided Permanent Supportive Housing assistance to more than 27,000 homeless individuals and families.

The city, which has already surpassed its goal of creating 10,000 new units of affordable and supportive housing by 2026, is developing more than 2,000 units annually, shrinking the real estate map for potential properties to house cannabis retailers.

Under L.A. statute, Permanent Supportive Housing provides long-term rental subsidies and a combination of support services for those experiencing:

  • Chronic homelessness.
  • Disabilities.
  • Chronic medical conditions.
  • Behavioral health conditions.

That wide net, coupled with ongoing expansion of PSH dwellings, has made it more difficult for cannabis operators to find and secure property.

The PSH dwellings are also the hardest sensitive-use properties to detect and confirm, according to Alex Freedman, a former city attorney turned industry executive.

“There’s not a website you can just go to and get a list of every single Permanent Supportive Housing location,” said Freedman, the president of Traditional, an L.A.-based cannabis retailer and cultivator.

“It’s really a guessing game as to whether it’s going to be a disqualifying sensitive use.”

The DCR is in charge of such decisions.

More often than not, Steinberg’s clients roll the dice and wait for the DCR to approve or deny the location.

“The only way we’re going to know is if we file,” said Steinberg, who offers this advice to prospective renters:

“Determine how risk averse you might be or not. And if you sign a lease with that landlord, be damn sure you can get out.”

Two disenfranchised constituencies

To qualify under the city’s social equity program, applicants must have a “prior California cannabis arrest or conviction” and either be low income or live in an area identified as disproportionately affected by policing.

Social equity advocate Bonita Money wants the mayor to consider the plight of social equity applicants as well.

Through late January, nearly a third of the city’s 227 retail locations were owned by social equity applicants, according to the DCR.

Some social equity retail lottery winners have been trying to secure real estate in L.A. for years.

Others have spent thousands in monthly rent awaiting approvals.

“The homeless problem needs to be addressed. for sure,” said Money, the executive director of the National Diversity & Inclusion Cannabis Alliance (NDICA), which helps social equity applicants nationwide through the approval process.

“But you can’t fix one problem and then just create another.”

Help unlikely on the way

Money has been pressing L.A. politicos to narrow the distance between sensitive-use properties and marijuana retail outlets to 600 feet, in line with state regulations.

But the political will to significantly address cannabis business issues in the world’s largest marijuana market isn’t a priority right now, according to Rivera.

“There’s very few council members that are enthusiastic about the industry,” he said.

“I totally respect and support the urgency around homelessness. I’m hoping at some point we can engage (the mayor) on the issues of cannabis.” (Full Story)

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