The Los Angeles Times said the City Council has until the end of the month to enact the ordinance, call a special election or place it before voters in May balloting.
City Councilman Paul Koretz said the proposal would permit only 100 medical marijuana shops to remain open.
The Times said city officials are also examining a second initiative that would keep more pot shops open.
The council's decision comes as a result of its agreement to reverse the ban on storefront sales of medical marijuana last fall after activists gathered enough signatures to put the repeal of the law on the primary ballot in March.
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