In an eleventh-hour attempt to assert some control of the looming return of medical marijuana operations to the city, the Long Beach City Council voted unanimously last night to direct the city attorney’s office to prepare a competing tax initiative for the November ballot. The ballot measure could substantially raise the cost for industry operators in the city.
The move comes just one week after the council voted to approve placing a signature-driven initiative on the November 8 ballot, after it was communicated by the city clerk’s office that it most likely had the required number of votes to qualify.
The Regulation of Medical Marijuana Businesses (RMMB) petition, which received over 35,000 signatures, would strike down some previously approved taxes levied on the industry in the city of Long Beach and would set a new standard of a 6 percent sales tax, to be charged to businesses and collected by the city—a sum that is projected to be in the millions annually.
The motion last night aims to create a new tax schedule for the industry with flexible rates that can be increased by a majority vote by the city council. Newly elected Vice Mayor Rex Richardson, one of the motion’s authors, laid out the tax ranges, including a 6-8 percent range on dispensary sales, 8-12 percent range on recreational sales, 6-8 percent range for manufacturing and processing and $12-$15 per square foot range on cultivation.
“Tonight we have an opportunity to ensure that our taxable structure is set up in a way that we capture revenue from both medicinal and recreational cannabis in order to offset our own costs as a city and that we have the resources that ensure a public benefit,” Richardson said.
The proposed tax model would run as a competing initiative on the ballot, in terms of how the industry would be taxed if the voters do approve it to legally return to the city. In order for the proposed taxes to take precedence, the council’s initiative would require a higher percentage of votes than the RMMB petition.
Potentially increasing taxes on the industry was framed as a way to help offset the expected costs incurred by the Long Beach Police Department (LBPD), which has publicly stated it will have its resources stretched thin if the industry is allowed to operate in the city again. LBPD Chief Robert Luna has stated on many occasions that despite the millions of projected revenue expected to be generated by the industry, the amount of officers needed to police it to keep surrounding communities safe would simply make it a “break even business.”
That position has been defended by Third District Councilwoman Suzie Price, who last night asked that a resolution also be drafted to allocate any revenue generated by this proposed tax schedule for public safety.
Because the taxes are a general tax and the revenue would be put into the general fund, City Attorney Charles Parkin advised the council it would need a resolution similar to the one drafted for Measure A, which would serve as a non-binding promise to spend the funds on a specific purpose. If the ballot initiative included specific language, the item would require a two-thirds vote to pass.
The idea that an industry that could already be hit by state and county taxes will again be taxed at the city level did not sit well with some members of the public, who advocated for leaving the tax rates as already outlined in the initiative, slated for a vote in November, or to not tax medical marijuana at all.
Former Seventh District Councilwoman Tonia Reyes Uranga was among the latter. She shared the story of her sister’s husband, who suffered from late-stage colon cancer and benefited from the use of medical marijuana products, ones that are expensive and not covered by insurance providers.
“She couldn’t take her Blue Shield card and get compensation for his medicine that really helped alleviate the pain,” Uranga said. “She couldn’t do that; she had to cash in her retirement so that she wouldn’t see him suffer.”
Uranga asked the council to consider leaving medical marijuana untaxed while placing the burden on those selling and purchasing recreational marijuana if the state’s voters approve that measure.
There is a growing list of marijuana-related initiatives on the November 8 ballot that voters will have a say in. A statewide initiative that could legalize the recreational use of marijuana qualified earlier this year, and last week the Los Angeles County Board of Supervisors voted to place a 10 percent tax on sales, with the revenue going toward homeless issues.
Others voiced their concerns that raising taxes too high on the industry could essentially render some of owners unable to operate in the city. Stefan Borst-Censullo, a Second District resident and local industry lobbyist, spoke to this point, stating that if you include the total taxes from all levels in the state, it could be upward of 50-75 percent in taxes.
He asked the city council to leave the tax rate as proposed in the citizens’ initiative, because the rate of 6 percent is “reasonable and balanced”.
“Please do not tax retail, tax manufacturing, feel free to tax cultivation, distribution, any of those things,” Borst-Censullo said. “But at this point, wait until the county is making clear how much of a bite they’re going to be taking on the front end.”
The draft of the tax proposals is scheduled to appear before the council at its August 2 meeting, which is also the deadline for the council to place any competing initiatives on the ballot.