(This story has been updated to include the city’s announcement of its agreement with state regulators as well as quotes from a spokesman for the state Bureau of Cannabis Control and comments from a DCR spokesperson.)

Los Angeles officials have reached an agreement with California regulators that’s designed to free up a licensing logjam that has prevented the city’s marijuana companies from opening their doors because they don’t yet have local business permits.

The agreement, which the city announced on the Department of Cannabis Regulation’s website, could allow hundreds of L.A. cannabis businesses that have been waiting months for local permits to begin operating before year’s end.

The Southern California Coalition (SCC) – which represents a wide swath of L.A. cannabis businesses hoping to obtain city permits – wrote in a draft blog post before the city’s announcement that the Department of Cannabis Regulation (DCR) has “completed negotiations with state agencies, clearing a path for Phase 2 applicants to receive local, temporary authorization.”

A DCR spokesperson emphasized that the total number will likely be less, since only paid applications will be eligible. At last count, there were at least 334 applications that had paid the required fees.

Positive development

That’s good news for L.A. cannabis growers, edibles makers, distributors and other nonretail businesses that have been waiting months for city permits.

Up to now, the city has licensed 169 retail locations but no other types of cannabis companies, although many of those 169 have also received distribution, cultivation or manufacturing licenses, a DCR spokesperson said. (Testing labs trying to get city permits are going through a separate licensing process, a DCR spokesperson said, and are not subject to the social equity parameters that all other license types fall under. To date, at least 11 labs have received temporary approval from the city.)

L.A.’s Phase 2 round of licensing opened in August and closed Sept. 13, but so far none of those licenses has been issued, and the city was running up against an end-of-year deadline for temporary state licenses.

According to the SCC blog post, the city “obtained approval for a letter of authorization to be issued to Phase 2 applicants immediately. The letter is being written now.”

“The fact that this is an authorization, rather than a (city) license, should not be cause for concern,” the SCC continued, noting that only some type of local authorization is required to obtain a state MJ business permit.

“Applicants will still receive a local license when they have completed the City’s licensing process.”

The DCR website was updated Thursday afternoon with an announcement that a new process is in place to allow Phase 2 applicants to apply for temporary state permits “before DCR issues Temporary Approval.”

“‘Phase 2 Priority Processing’ applicants who have paid their application fees will have the opportunity to apply for a state temporary license before the end of the year,” according to the DCR’s new post. It also notes that applicants will receive a “Local Authorization Letter.”

The letter “will allow an applicant to engage in commercial cannabis activities only after satisfying all conditions imposed by DCR.”

State is ready to act

Alex Traverso, spokesman for the state Bureau of Cannabis Control, said his agency is eager to issue more temporary business licenses as quickly as possible for companies that can submit applications.

“We’ve been talking to the city about this, and ultimately, from our perspective, our process doesn’t change,” he said.

“They can tell us these businesses are good to go, but for the businesses to get a temp license by the end of the year, they have to follow the same process as everyone else.”

Traverso also said authorization from local authorities – such as the DCR or L.A. regulators – can be as simple as a letter from city officials with the names of applicants approved to run commercial cannabis operations, as opposed to a formal permit for each company that wants a license.

“It doesn’t need to be a finely worded letter,” he said. “It could just say, ‘The city of L.A. approves these businesses for operations,’ with a list of names.

“We’re waiting for them to open up and allow more licensees.”

The Department of Food and Agriculture and the Department of Public Health could not immediately be reached for comment.

John Schroyer can be reached at [email protected]