Long Beach will begin work on establishing a tax-relief program for local cannabis dispensaries who meet certain qualifications, the City Council decided during its Tuesday, April 18 meeting — which city officials say will help legal sellers compete with illicit operators and provide living wages to their employees.
The motion, which was brought forward by Ninth District Representative Joni Ricks-Oddie, Vice Mayor Cindy Allen, and Sixth District Representative Suely Saro, asks Long Beach’s Office of Cannabis Oversight to develop the tax incentive program and return it to the body for consideration in the 2024 fiscal year budgeting process.
“Cannabis revenue in the city of Long Beach has increased every year since its inception, and in the last few years exceeded initial expectation with a culmination of more than $13 million in fiscal year 2023,” Ricks-Oddie said Tuesday. “Unfortunately, along with this good news comes a harsh reality.”
Despite the industry’s success, Ricks-Oddie said, the illicit cannabis market is still estimated to be three times larger than legal operations in California — posing significant competition to legal operators, whose prices are often much higher because of cannabis and sales taxes.
Long Beach’s cannabis tax, dubbed Measure MA, was approved by voters in 2016.
The schedule was later reduced in 2019, but as the rates currently stands, local cannabis sellers are required to pay 6% of gross receipts for medical retail sales, 8% of gross receipts for adult-use retail sales, 1% of gross receipts for lab testing, distribution, and manufacturing businesses, and $13.70 per square foot of canopy under cultivation, according to a Tuesday memo.
“Our current cannabis tax structure makes it difficult for our legal operators to compete with the illicit operators that are able to dodge not only the city’s cannabis tax — but also the general sales tax,” Ricks-Oddie said. “(A tax) reduction (has) a host of potential benefits, including making legal cannabis products more affordable to patients and consumers, making legitimate operators more competitive and increasing the share of local cannabis sales taking place in the legal market.”
Ricks-Oddie’s memo suggested that Long Beach follow in the footsteps of the Santa Ana City Council, who recently passed a similar program meant to help bolster the local, legal sale of cannabis in their city.
In Santa Ana, cannabis operators can qualify for a 3% tax reduction if they meet the following criteria:
- Pay their employees at least 115% of the state minimum wage;
- Offer the majority of their workers full-time hours;
- Assure that delivery drivers are reimbursed appropriately for using their vehicles;
- Provide on-the-job paid training opportunities with state-certified programs to create career pathways;
- Create an on-ramp into the industry for community members, and promotegrowth from within;
- Hire at least 40% of their employees from low-income neighborhoods in Santa Ana by 2025.
“I’m lifting up Santa Ana as a recent model that could potentially work here in Long Beach,” Ricks-Oddie said. “Ultimately, we should be able to (reward) high road employers that make investments back into our community by offering basic labor standards, living wages, increased worker opportunities, career advancement and on-the-job training.”
About 30 residents, and local long beach business owners, and cannabis industry employees descended on the City Council chambers Tuesday evening to show their support for the item. They burst out in applause when the council unanimously approved the item.
“We need a tax reform now,” said Jason Jimenez, Catalyst Cannabis’ retail director, on Tuesday. “Our industry needs to have the city development tax relief plan to help stimulate growth to local cannabis retail establishments and work companies for hiring local provide living wages.”
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Tax-relief program would help Long Beach marijuana sellers compete with illicit cannabis operators
