Taxes will be cut in half by next year for the lone equity cannabis business in Long Beach, as the city council took another step in trying to even the playing field for equity businesses at its April 18 meeting.
The city started its Cannabis Social Equity Program in 2018 to help communities that were disproportionately impacted by the War on Drugs benefit from the now-legal cannabis market. Since cannabis has become legal in Long Beach, 32 retail locations and 37 cultivators have been established—but only one of these is an equity business.
“This is something we’ve been working on for quite some time, for a little longer than I’d like to admit, but obviously social equity has been a priority of this council for many years,” said Councilmember Al Austin. “We need to make sure that we’re opening new doors for those who have been left out of the industry from the very beginning.”
The City Council approved a different ordinance earlier in the night to lower taxes for all cannabis businesses across the city, but did not specify how much taxes would be lowered. There was more clarification for equity businesses, which will be lowered by half.
The current tax rates for cannabis sales in Long Beach are 8% for adult recreational use, 6% for medical use and $13.70 per square foot of canopy space for cannabis cultivation. These rates will continue to be half of whatever price is set by the Consumer Price Index for Los Angeles-Riverside-Orange County areas.
“The concept here is that we have tried to have equity businesses in cannabis for many years and we haven’t been that successful so there’s been a lot of discussion of trying to create opportunities to invite more equity cannabis operators in,” said Mayor Rex Richardson. “What we’re finding with existing businesses is … the market is starting to settle and we’re learning what the real market price is and the 8% [tax rate] is hurting [the businesses].”
According to city staff, Long Beach has seven cannabis equity clients who are in the process of getting their licenses approved. The city estimates that these businesses will be able to get started by mid-2024 or early-2025, but residents are saying that they’ve already waited long enough.
“Due to the country’s economic situation and the volatile cannabis industry in California, it has been very difficult if not impossible for equity applicants to start a new cannabis business within any district in Long Beach,” said a Long Beach resident who only identified himself as Edgar. “The city of Long Beach’s Equity Program must pivot to assure that the goal of having successful equity businesses operational can happen within 2023. We’ve had this program for five years and we still have not seen any progressive movement yet.”
Jillian Xavier said she’s been trying to get her license approved as an equity business in Long Beach since 2019 and is the only prospective equity testing lab.
“We’re still sitting here, we can’t get our businesses off the ground,” Xavier said. “We’ve been here since 2019 trying to get into the program, fighting to get real estate, sitting there giving free rent to the landlord for a year now.”
Councilmember Kristina Duggan said she was concerned about lowering the tax rates by half and asked if there had been an Economic Impact Report conducted. City staff replied that although no report has been done, “usually lowering taxes helps businesses to grow.”
Duggan suggested the city pass the ordinance, but sunset—or end it—after five years once Long Beach can analyze the economic impacts.
“I’d like to get eight licenses going and off the ground and then we can assess the economics then, but as of now this is hypothetical,” Austin replied. “We don’t have any information because we don’t have any businesses operating right now. I think the goal of this is to get the rates established and allow us to establish some equity programs.”
City Council passed the ordinance unanimously, and the new tax rates will be adopted as part of the 2024 budget.
MS Duggan is putting the cart before the horse. Cut axes and then wait 5 years to see the results. What kind of voodoo economics is this? We (taxpayers) have been subsidizing the marijuana shops since the day they opened. Every economic “experiment” this city has tried always ends as a money loser. Why not try this experiment: raises taxes for all marijuana shops and see what happens. I’m betting on overall increased marijuana tax revenue for the city. Yes, there will be plenty of complaints but users will keep on using no matter what the price. Time to stop using us as Guinea pigs and make this industry stand on its own two feet. If they fail, so be it. It’s called free enterprise.
One of the funniest articles I’ve ever read. These people are clowns. “Equity business”. Just let these equity pot dealers set up shop like all the taco stands on every corner throughout the city. Tijuana North .
Problem solved.