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Recommendation to request City Manager to work with the Office of Cannabis Oversight to develop a tax relief plan to help stimulate the growth of local cannabis retail establishments with structured incentives that promote community benefits, local hiring, livable wages, and fair labor standards, and return to the City Council as part of the FY24 budget process.
DISCUSSION
On November 8, 2016, voters in Long Beach approved Measure MA, authorizing a tax structure on medical and adult-use cannabis to coincide with the State-level passage of Prop 64, which legalized specified personal use and cultivation of marijuana for adults 21 years of age or older. Starting in FY 20, Measure MA tax revenues have significantly increased when compared to the onset of the tax. In FY 22, Measure MA tax revenues peaked at $13.1 million, primarily from adult use retail sales. The FY 23 General Fund budget anticipates $12 million in Measure MA revenues. These revenues not only support staffing to administer, enforce and oversee the City’s cannabis operations, they also fund an array of general City services including homeless outreach, equity programs, and park maintenance.
As Long Beach aims to grow its revenue streams through Mayor Richardson’s Grow Long Beach Initiative to make up for the phasing out of oil production, it will need to look at all available revenue sources, including cannabis. Last fiscal year, City revenues generated through the cannabis industry surpassed the City’s transfer of net Uplands oil revenues to the General Fund. Cannabis taxes in Long Beach currently sit at 6% of gross receipts for medical retail sales and 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. The illicit cannabis market, which is estimated to be three times larger than the legal market statewide, poses problems for both legitimate cannabis retaile...
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