If it was in Prod Environment I would asked you to review if L1 is Production List. Having said that here is the thread which discusses that it was a bug and had been fixed.
As a workaround see if any of these options help. If L1 is Numbered list try creating L0 as Parent of L1 instead of having Top Level, it should work but if L1 is a non Numbered list see option 1 & option 2 below.
It was actually DCA. 🙂 I forgot that Forms don't work (or have severe issues) when using DCA driven line items. In my case I had a form to enter new investments with the option to sign-off the investment for further approval directly in the form. That caused that new items couldn't be created because of "read" access.