So why did West Hollywood’s four existing cannabis dispensaries, which continue to push the City Council to grant them permanent recreational sales licenses, lose out in their competition for those eight licenses?
An analysis of the 54 criteria used by the independent committee appointed to score the 94 applications received by the city offers an explanation.
The five-member application evaluation team appointed by City Manager Paul Arevalo graded 313 applications in five major areas (business plan, design concept, security plan, experience and overall quality) with a total of 54 subcategories. The 94 applications for recreational cannabis licenses were part of a total of 313 applications that included other licenses such as medical cannabis sales, cannabis smoking lounges, cannabis edibles lounges and cannabis delivery services. The evaluation took place over many months and cost the city a total of $325,000.
The grades that each of the five evaluation team members gave to each of applicants were averaged, with those averages added up across all categories to develop a final score. The eight winners had an overall average score of 178.71 points across all categories.
By contrast the overall average score of the four existing cannabis businesses was 168.68 points. The closest runner up among those businesses, whose lobbyist has dubbed them “The Originals,” was Los Angeles Patients and Caregivers Group, with 172.22 points, 96% of the average score of the winners. Next was Zen Healing Collective, whose total score was 95% that of the average of the winners. LAPCG and Zen ranked No. 9 and 10 respectively among the total 94 applicants. In third place was MedMen, with a total score that equaled 94% of that of the winners followed by Alternative Herbal Health Services, whose total score was 92% of that of the winners. MedMen ranked 13thamong all applicants and AHHS ranked 17th.
Here are some specific categories where each of the existing cannabis businesses fell short in comparison to the winners:
Alternative Herbal Health Services
AHHS’s score in the assessment of its business model as innovative was 87% that of the average of the ten winners. Its ranking was 89% of that of the winners in the Connection to WeHo category (ability to serve West Hollywood and familiarity with the city), a ranking boosted a bit by the fact that its score in the subcategory of reflecting WeHo Core Values was 103% that of the winners. Its score in the Local Business Partnerships (procuring goods and services from local businesses) subcategory was 74% that of the winners.
In the Operations category, AHHS had low scores in the subcategories of handling product recalls (60% that of the winners) and the subcategory of employee training (74%). Employee training looked at the quality of training about differences in and potency of cannabis products and laws governing personal use).
The overall Social Equity category was the one where it ranked lowest in comparison to the winners, with a total score that was 86% of their average. The category included assessments of an applicant’s provision of a living wage and employee benefits in compliance with the law and having employee non-discrimination policies. AHHS’s score in working with small cannabis cultivators was 69% that of the winners and its score in the Economic Inclusion in Production subcategory was 63% that of the winners. That subcategory was a look at the degree to which an applicant would purchase products in census tracts where the income levels are below the state average. AHHS got somewhat of a boost in the overall category with a Significant Social Equity subcategory score that was 106% that of the winner. That category included other social equity components, including involving minorities in the business or its ownership.
AHHS’s score in Product Procurement was only 62% that of the winners. And its score in the Environmentally Conscious Producers subcategory was only 68% that of its competitors.
Los Angeles Patients and Caregivers Group
LAPCG’s score in the online ordering system educational component subcategory was 48% that of the winners. That subcategory evaluated applicants based on actions or plans to educate online customers about cannabis products and their potency. Its other significantly low ranking came in the subcategory of Armored Car (daily cash pickups by an armored vehicle), where its score was 63% that of the winners. It also had a score in the Design Concept Creativity subcategory that was 78% that of the winners.
MedMen’s lowest score in relation to that of the winners was in the Significant Social Equity category, where it garnered only 44% of the average number of point awarded to the winners. It score in the subcategory of Compensation Package was only 77% that of the winners. That subcategory looked at the quality of the compensation package offered to employees, including salary, health and other insurance benefits, a retirement plan and paid leave). It also ranked relatively low in dealing with environmentally conscious cannabis producers (a score that was 74% that of its competitors).
Zen Healing Collective
Zen ranked lowest in comparison to the winners in the ranking of its process for handling product recalls, where it got only 60% of the score of the winners. It also was ranked low in comparison to the winners in the subcategory of Procedure for Product Procurement (62%), Economic Inclusion in Production (63%)
Where the ‘Originals’ Ranked High
“The Originals” beat the average score of the winners in some of the categories. All of them beat the winners in the Experience category, a reflection of the fact that they are already in the cannabis retail business. Zen Healing Collective’s score was 113% of the average of the winners, followed by LAPCG and AHHS, whose score was 111% of the winners, and then MedMen, whose score was 106%.
Other categories where one or more of existing cannabis retailers bested the winners were:
Environmentally Conscious Producers. Zen Healing Collective’s score was 114% that of the winners.
Integration of Security Measures. Zen Healing Collective’s score of 2.575 in the “integration of security measures” category was 115% of that of the average score of all the winners in that category. LAPCG’s score was 111% of that of the winners.
Cash Management Plan. In this category, important because the Federal law making cannabis sales illegal has curbed the ability of retailers to use credit card services, LAPCG’s score was 111% that of the winners.
Employee Safety Education. Here Zen’s score was 110% that of the winners.
Experience: Ownership Team. In this category the Originals’ scores ranged from 113% to 106% the average of the winners.
Cannabis Industry Knowledge: LAPCG’s score was 103% that of the average of the winners and Zen Healing Collective’s was 105%.
WeHo Core Values. Three of the Originals had scores that equaled 111% the average of the winners. AHHS’s score was 103%
Employee Training: LAPCG ranked 4% higher than the average score of the new winners.
Product Procurement: Each of the originals except AHHS had a score that was 103% of that of the new winners. AHHS’s score was 62% of the aggregate of the winners.
The West Hollywood City Council on Monday night voted four to one to agreed to extend the recreational cannabis sales licenses granted temporarily to the Originals until the eight newly licensed businesses are up and running.