Adam Hijazi, co-owner of the Long Beach Green Room, opens a jar of marijuana buds at his dispensary. The city’s first legal shop to sell medical cannabis opened earlier this fall. While sales of recreational marijuana are still banned in Long Beach, some retail outlets offering medical cannabis are already in the process of earning business licenses through a rigorous process with the City.
Last week, the Long Beach City Council unanimously voted in favor of an urgency ordinance that continues a moratorium on the sale of recreational marijuana. The Dec. 19 moratorium is set to last for 180 days, according to the City of Long Beach website.
The action favoring the moratorium is consistent with the city leaders’ previous decision to prevent the recreational pot shops from operating in Long Beach. In November, the council passed the temporary ban on sales of recreational marijuana. At the same time, city leadership provided specific directions for the city manager to develop recommendations for regulations on businesses that plan to sell recreational pot. The 180-day ban also allows time for the city attorney to prepare a draft ordinance on the recreational-pot industry.
Although entrepreneurs who are willing to invest in recreational-pot retail outlets can’t legally set up shop in the city, those individuals with a business license for a medical-cannabis storefront have an advantage. Medical-cannabis shop owners already are making a deep investment when they choose to operate a retail store in Long Beach. Many of them know the municipal guidelines really well. They joined an advocacy group that successfully campaigned more than a year ago to pass city measures that laid down the local laws for the industry.
On Nov. 16, 2016, California voters passed Prop. 64, which legalized marijuana throughout the state, and Long Beach voters passed two measures, which together regulated and taxed the city’s marijuana businesses.
Longtime medical-marijuana advocate Larry King is also a business owner who plans to open the doors to his 9th-district shop around the first week of March. In a phone interview with the Signal Tribune, he estimated this week that he’s facing costs close to $500,000 in upgrades to the facilities in order to comply with regulations. King added that these expenses don’t include the staff costs.
While marijuana advocates like King claimed victory at last year’s election, he noted that the previous ban on all cannabis brick-and-mortar shops fostered the growth of black-market delivery services. King predicted that if legal shops like his could survive long enough to compete with these black-market operations, those illegal businesses should disappear. He said he is working to develop the shop’s own delivery service, which would be based out of his dispensary. King described how the products will be higher quality and will be safer. He noted that quality products will be trusted, especially in light of the numerous regulations and standards for the legal businesses. King anticipated that eventually, customers would rather ask his shop to deliver marijuana to their home, instead of relying on an unknown black-market service.
“So, yeah,” King concluded, “we should be able to out-class the black market.”
Over the last year, marijuana-business owners have waded through a laundry list of requirements from both the City of Long Beach and the Bureau of Cannabis Control, California’s new agency for regulating marijuana.
King did not seem terribly worried about the council’s decision to continue a moratorium on the sale of recreational pot. His first interest is the medicinal application of cannabis, he explained.
King might be better prepared than other business owners for the potential new market in recreational pot, if city leaders eventually approve an ordinance to regulate those sales. He had just learned earlier this week that, if allowed to sell recreational pot in addition to medical cannabis, he could sell both products in the same store as long as they are properly labeled.
King noted some of the differences between the two products. Recreational pot could only be sold to customers aged 21 and over. Rules governing the sale of medical cannabis require customers to be over the age of 18, and they must have a prescription. Sales tax on medical cannabis is lower than the sales-tax rate on recreational pot.
Elliot Lewis, who recently opened Connected, a medical-cannabis shop in Belmont Shore, understands that black-market delivery services with lower overhead are a threat to legal business operators who comply with city and state regulations.
“So, I think it’s taking a while for clients, customers [and] potential customers to break those habits of buying on the black market,” Lewis said in a phone interview with the Signal Tribune, noting that the competition is tough between legitimate businesses and the black market.
Lewis would like to eventually offer recreational marijuana in his shop too, but he acknowledged that at least the council agreed that the City needs a comprehensive ordinance if it plans to allow recreational-marijuana shops in the city.
Lewis described his own deep investment to get his store to open its doors on 2nd Street in Belmont Shore. The costs were higher than expected, he said, and he explained that he had to comply with numerous security and facility requirements. The Signal Tribune asked Lewis about the likely ability to make a profit even with the initially high investment costs. Lewis replied that he still has to run a business well. He still has to offer good customer service.
“I think a lot of people are under the impression that it’s just raining money out of these places,” he said with a laugh. “But I think that’s a little bit of a misconception.”
