Long Beach city officials recently reviewed the current state of cannabis taxation, revealing ongoing challenges for local cannabis retailers. Despite a promise of a 3% tax credit aimed at supporting legal cannabis businesses against the black market, a new report indicates minimal participation in the program. As of now, only two cannabis businesses have applied for this tax relief, with just one nearing qualification. The low engagement stems from strict eligibility requirements, including being current on cannabis tax obligations and adhering to payment plans. Many businesses have defaulted on these agreements, limiting their access to the tax credit.
Cannabis businesses in Long Beach face a heavy tax burden, comprising a 15% state excise tax and an 8% city retail tax, which is set to increase to 10.75% alongside regular sales tax. The City Council previously acknowledged the overtaxation of the cannabis sector, leading to a reduction in the city retail tax from 8% to 7% and the introduction of the tax credit program. However, compliance with the program’s conditions has proven difficult for many retailers.
As of April 2022, cannabis businesses in Long Beach owed the city $8.5 million in back taxes, primarily accumulated during the pandemic when late fees were suspended. While $2.8 million of that debt has been repaid, $7.2 million remains unpaid, and city officials expect many of these debts will not be recovered due to the number of businesses that have ceased operations. The report highlights the precarious state of the cannabis market and the financial implications for the city.
In response to these challenges, city officials are exploring ways to increase cannabis sales opportunities, including the possibility of permitting sales at special events beyond dispensaries. This move aims to bolster both the industry and the city’s tax revenue.
In other news, the Long Beach City Council plans to accept a lifeguard tower originally featured in a Billie Eilish promotional video for the 2028 Olympics. The tower, which has become a local symbol following an infamous mix-up identifying a beach location, will be used for community events and public engagement, according to City Manager Tom Modica. The council is set to vote on the acceptance of this donation during its upcoming meeting, further integrating the city into Olympic-related activities.
Overall, the current report on cannabis taxation reveals significant hurdles for local businesses and underscores the need for ongoing evaluation of tax policies to support the legal cannabis industry in Long Beach.
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