Will LA’s Social Equity Retail Licensing Be Stopped?

This Thursday, December 8, 2022, the City of Los Angeles will open Phase 3, Round 2 of storefront retail licensing. The City will only accept applications from verified social equity applicants. It will select winners via a “triple-blind” lottery, awarding up to 100 retail licenses. But a guy in Michigan is trying to prevent the lottery from moving forward on constitutional grounds. Let’s look at what’s going on.

Law360 recently reported on a case filed by a Michigan resident seeking to halt LA’s program. The same plaintiff successfully halted licensing in parts of New York on similar grounds, and has also filed claims in other jurisdictions to varying degrees of success. His claims boil down to one key question: do LA’s social equity violate the Dormant Commerce Clause of the United States Constitution?

Before analyzing LA’s retail licensing program, let’s look at why the Dormant Commerce Clause is important. As we wrote in a recent post:

[I]n general the [Dormant Commerce Clause] prohibits states from enacting laws that place substantial burdens (discriminate) on interstate commerce. This means that when a state enacts a law that regulates interstate economic activity by favoring its own residents, as with Maine’s residency requirement, it

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