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Only 2% of Long Beach, CA, marijuana social equity applicants operating

Published July 20, 2020

Just one out of 50 business applicants who qualified for Long Beach’s marijuana social equity program has actually entered the California city’s cannabis industry.

In a letter to city leadership, the acting Long Beach city manager wrote that according to applicants:

“The primary reason for the discrepancy between interest in the program and actual business license applications received is the substantial amount of capital necessary to start a cannabis business.”

Long Beach was one of several California localities that received state grant money to bolster their cannabis social equity programs.

The city took in $2.7 million in funding, but so far that hasn’t translated to more minorities actually owning marijuana companies.

Long Beach’s cannabis program manager told the Business Journal he was not aware of any Black-owned marijuana retail stores in the city.

For a sampling of organizations and efforts that support, foster and enhance social equity in the cannabis industry as well as opportunities for minorities, overall diversity and racial justice, click here.

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Another social equity program that requires the real estate before the license, which is typically a higher barrier to entry for most social equity/ minority applicants. Not only that, but the city won’t even allow additional retail licenses for social equity. How can you exclude social equity businesses the opportunity to operate in a major part of the supply chain? Seems like the city isn’t in tune with the needs of social equity or cannabis at large (other than the recent cannabis tax reduction).

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Just one out of 50 business applicants who qualified for Long Beach's marijuana social equity program has actually entered the California city's cannabis industry.

Some Long Beach cannabis businesses will see tax rate drop to 1%

The City Council approved at its Tuesday, Dec. 17, meeting an ordinance that will lower the business tax rate for manufacturers, distributors and testing laboratories from 6%.

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The tax for some cannabis businesses in Long Beach is about to get a lot lower.

The City Council approved at its Tuesday, Dec. 17, meeting an ordinance that will lower the business tax rate for manufacturers, distributors and testing laboratories from 6% to 1%.

The item must come back to the panel for approval once more before it can be signed into law.

Tuesday’s vote came without much fanfare. But it followed a meeting earlier this month in which cannabis business owners and employees lobbied for the change.

Steven Contreras, who works in the local industry, said the move would help the regulated market better compete with the black market.

“My employer provides union wages, affordable healthcare and job protection,” Contreras said during the Dec. 3 council meeting. “If the city does not lower the cannabis tax rate, it’ll make it impossible to compete with the illicit market, which does not provide any of those things.”

Contreras and others in the industry spoke after city staff gave a report on what type of impact a lower cannabis business tax rate could have. Though the city’s Cannabis Program Manager Ajay Kolluri said it could attract more businesses in jobs, he said a staff analysis showed that lowering the tax rate would likely decrease the amount of revenue Long Beach receives.

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But Gregory Lefian, CEO of the Chronic Pain Releaf Center, said Long Beach shouldn’t be deterred by that report.

“I know that 1% of something,” he said, “is much more than 6% of nothing.”

Councilwoman Suzie Price, for her part, said she agreed with that conclusion.

“Anything we can do to help those businesses succeed,” she said, “I’m happy to do, because they are a legitimate partner to us in the city of Long Beach, and the voters have made that so.”

Councilman Rex Richardson, who has been the most vocal supporter of reducing the tax rate, said he hoped the move could spur job growth in the burgeoning industry.

Although city staff presented the option of lowering the rate to 1%, 2% or 3% during the Dec. 3 meeting, Richardson ultimately said he wanted to support the change that could create the most new jobs.

“What we’ve got to understand and grapple with is: Is the industry real, and does it create real jobs?” he asked.

Pointing to the city staff report, he noted that with a lower tax rate, Long Beach could be home to more than 800 jobs in the cannabis industry.

“We should go for what creates the greatest impact on jobs,” he said, “which is 1%.”

Some Long Beach cannabis businesses will see tax rate drop to 1% The City Council approved at its Tuesday, Dec. 17, meeting an ordinance that will lower the business tax rate for manufacturers,