Long Beach’s cannabis laws will now allow for manufacturers to share space in an effort to bring more businesses with less initial capital online after the City Council unanimously approved a shared-use amendment Tuesday night.
The change will allow businesses that infuse concentrates into products, extract cannabis oils using butter or oils or just package and label products to use the same space, similar to a commercial kitchen, but the law will require common-use space to be used at scheduled times by individual operators.
The tweak to the law will prioritize equity applicants——those who have lower incomes, live in underserved parts of town or have prior criminal records tied to cannabis—for up to one year, or until 15 licenses have been issued to equity applicants, whichever happens first. It also removed a requirement for equity applicants to be receiving unemployment benefits to qualify. The move comes after years of complaints about the lack of diversity of owners in the industry.
Earlier this year the City Council voted to look at opening up shared-use opportunities in the city in part to expand opportunities for equity applicants to enter the industry. Long Beach’s voter-approved cannabis measure allows for 32 dispensaries, all of which have been permitted or are already open.
Emily Armstrong, the city’s cannabis program manager, said that the barrier to entry would be lower with the shared-use model, noting that a business owner going it alone could pay up to $1 million in start-up costs but sharing space could reduce that to about $100,000.
Despite the additional opportunities for equity applicants, some in the industry think the city needs to go farther in opening up the industry to people whose communities have been negatively affected by the war on drugs.
Some dispensary owners have argued that opening up more dispensary licenses to equity applicants might only lead to predatory partners eventually taking over an equity applicant’s business. The city’s model requires an equity applicant to have a 51% ownership stake and the millions in investments it can take to open a brick and mortar location can require partnerships with financial backers.
Elliot Lewis, owner of multiple Catalyst cannabis dispensaries across the city including a location on Second Street and a new location on Pine Avenue, said that the city’s stance that it is too hard for equity applicants to open brick and mortar locations is based on bad information it’s received from others in the industry who he alleged are self-interested or lying.
“Do I support a man dying of thirst in the desert getting two droplets of water from a tincture? Sure, I wouldn’t be against it,” Lewis said. “But the man needs a glass of water and needs to be taken out of the sun.”
Lewis said that a lot of the business opportunities in manufacturing, like making cannabis distillates, is almost exclusively made by large corporations now as the industry has consolidated over the first few years of legalization in the state.
Carlos Zepeda held up a ziplock bag with two pieces of bread in it as he spoke to the council, saying that the pieces represented a dispensary license.
“With these two pieces of bread we can make a PB & J, a grilled cheese sandwich, we can separate the two pieces and make avocado toast,” Zepeda said before picking up a bag of crumbs which he said represented the shared-use manufacturing licenses the City Council approved.
He called for access to 10-15 new dispensary licenses and access to delivery licenses, something the city is currently analyzing. Armstrong said a feasibility study on increased delivery licenses could come back this month while a study requested in March to see if the city could create new dispensary permits that would be set aside for equity applicants could come back to the council by September.
Councilman Al Austin, who requested the city look into expanding the number of allowable dispensaries, doubled-down on his support for bringing equity applicants bigger opportunities in the cannabis industry.
“This council member is committed to getting you the bread,” Austin said.
Austin’s request in March asked the city manager to look at creating eight new dispensary licenses for equity applicants.