Leaders in the cannabis industry along with community members rallied for cannabis reform at Long Beach City Hall on May 10.
Some of the reforms demanded by the attendees were a reduction of retail taxes, a need for a fair social equity process and program, and urging the city to support state bill AB2792.
The council voted unanimously on a reduction in retail taxes and to make a social equity program, while responding positively to the future of the cannabis industry.
All of the items were supported by the Long Beach Cannabis Association (LBCA) and community members.
Over the past couple of years, the industry has been demanding a reduction of taxes at all levels, arguing that “the industry is on the brink of collapse,” due to inflation, high taxes, and competition with the black market.
Supporters filled half of the City Hall. Among them were some of the city’s more well-known cannabis businesses, such as Catalyst and Chronic.
Community members argued that because cannabis products are taxed at each level of the supply chain, it’s difficult for cannabis businesses in Long Beach to survive.
According to MJBiz Daily, farmers are almost out of business due to licensing fees, high cultivation taxes, and an oversupply of cultivation. Farmers are forced to offer depressed wholesale prices for their hard work, pushing them out of business.
Although heavy taxation brings revenue to the city, consumers are hurt in the process as well, due to having to pay 45% of taxes out the door every time. Everyone involved in the industry is barely managing to make a profit. Those suffering the most are citizens who were victims of the War on Drugs era and are now stuck in Long Beach’s social equity pipeline program.
The city accepted a $3 million social equity grant from the state in March, but the program has had one applicant accepted for the grant. At the moment, the program has 156 applicants.
“Give us what we need, you have a million-dollar (grant), and are giving 10 (applicants) $100,000 when it is half-million dollars to get in the business,” said Uriel Barrel, an upset applicant.
Barrel is one of many applicants who spoke on the grievances applicants face in a failing pipeline.
Pam Chotiswatdi, M.P.H., is a community activist who has been advocating heavily for the social equity program to have a process. Chotiswatdi has been helping applicants with navigating the social equity program and guiding them to resources.
One applicant that Chotiswadi was assisting had lost the opportunity to attain a license due to landowners inflating the cost to lease it. This is an ongoing issue, where finding a location is difficult because landlords inflate the lease for cannabis-related businesses. The city is planning to offer eight licenses, meaning more competition and a harder time for social equity applicants to get a lease.
According to Chotiswadi, an applicant that received a grant only had 30 days to find a location in Long Beach. Since the industry is viewed as a money-making machine, landlords lease the location for double the cost. This had happened to the applicant.
The applicant did not meet the deadline and had to return the grant to the city, starting the program all over. This dilemma creates an ongoing issue where applicants are left in the pipeline for years.
Councilmember Al Austin from District 9 said, “We have folks who went through the process, got their lottery reward to begin with, lost their businesses for whatever reason, and now they are coming back to be in the back of the line in the application process. I think that is counterproductive and unfair.”
Austin asked the office of cannabis oversight to start prioritizing social equity applicants who went through the lottery process. The council members unanimously all agreed there needed to be changes to how the city was managing the industry and demonstrated so by voting yes to all three items.