City staff will present recommendations for a new ordinance that would allow shared-use cannabis manufacturing at tonight’s Long Beach City Council meeting.
Shared-use cannabis manufacturing licenses would allow multiple businesses to rent space in one location in order to infuse cannabis concentrates directly into a product, package and label cannabis products, or use butter or food grade oil to extract essential oils from cannabis plants.
The proposed ordinance would give priority to licensing businesses owned by verified applicants of the City’s cannabis social equity program.
If approved, the City would issue the licenses for a one-year period or until 15 licenses are given out, whichever comes first.
This is meant to reduce competition in shared-use manufacturing locally so that social equity applicants have time to establish their business before the market opens to everyone.
After this period, shared-use cannabis business license applications would open for all qualified applicants.
In the recommended ordinance, there is no cap on the total number of shared use manufacturing licenses that can be issued.
A City staff report includes concerns that if shared use licenses are permanently restricted to only social equity applicants, these applicants will be preyed on and taken advantage of by investors who only want to use them to obtain a license.
“One example of these practices is investors partnering with equity applicants to obtain the license and then basically diluting the shares so that that equity applicant really doesn’t own that business anymore,” Emily Armstrong, manager of Long Beach’s Cannabis Social Equity Program, said during a virtual town hall meeting on June 16. “They have a very low share of the business.”
To combat predatory investing practices, the Long Beach Collective Association (LBCA)—a group composed of individuals and businesses in the local cannabis industry—has asked the City to compile a list of trustworthy investors for social equity applicants.
“From our research, equity businesses often fall trap to these agreements due to the need for resources and capital,” Armstrong said on June 16.
When the City first gave out 32 medical dispensary licenses in 2018, the social equity program had not yet been established.
Only these 32 original medical dispensaries were allowed to apply to become recreational storefront dispensaries.
As a result, there are no dispensaries owned by social equity applicants in Long Beach.
Righting past wrongs
The City of Long Beach’s social equity program aims to compensate for the damage done by the War on Drugs, which disproportionately targeted marginalized communities.
According to data from the City of Long Beach, although Black residents only made up 13% of the city’s total population from 2010 to 2016, they accounted for 44% of cannabis-related arrests during this time.
In comparison, White residents made up 27% of the city’s total population at the time but accounted for 17% of cannabis arrests.
According to a March 2019 report by the County of Los Angeles Public Health Substance Abuse Prevention and Control, 25% of incarcerated people were locked up for drug law violations.
Local cannabis association asks City to enhance equity program
The current social equity program has fallen drastically short of its goal.
As of June 24, only one out of 117 social equity applicants had opened a cannabis business, according to the Office of Cannabis Oversight.
The current cannabis equity program in Long Beach does not provide enough guidance or funding to allow most applicants to open a business, according to the LBCA’s Social Equity Subcommittee.
The LBCA presented a series of recommendations to the Human Relations Commission Wednesday, June 23 recommending changes to the program.
In its recommendations to the commission, LBCA stressed the importance of creating a clear path to ownership for social equity applicants.
The LBCA pointed out that even if the City approves new cannabis business licenses specifically for social equity applicants, it won’t matter if no one can afford them.
“While adding social-equity only cannabis licenses in Shared-License types, delivery, and store-front retail will create space for social-equity licenses, the additional licenses do not create a robust path for ownership,” the LBCA recommendation states.
If accepted by City Council, the ordinance would also remove unemployment benefits as a qualifying factor to become a social equity cannabis business owner, although it would still qualify individuals to become social equity employees at cannabis businesses.
The next Long Beach City Council meeting will take place today, Tuesday, July 6 at 5 p.m. in the Civic Chambers, 411 W Ocean Blvd. Meetings will be in-person for the first time since the pandemic began. Residents who wish to submit a public comment must attend the meeting in person.
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