A Downtown building covered in black tarp with its address spray-painted onto a plank of plywood in front was operating as an illegal cannabis delivery business, city officials allege as part of a recommendation to strip the owner of his commercial business license for that address.

City inspectors said in December 2020 they caught workers in the act of removing cannabis from a commercial building at 216 Atlantic Ave., and later found an estimated 2,000 packaged and jarred cannabis products in two vans parked behind the building being used to transport the drug.

On Tuesday, the City Council will vote whether to strip the business owner, Jorge Larios, of his commercial license for the address because he does not have a city cannabis dispensary license.

Long Beach’s cannabis laws limit the delivery of cannabis from within the city limits to be tied to an existing dispensary. A 2016 ballot initiative approved by voters capped the number of dispensaries allowed in the city at 32 and all of those licenses have been claimed.

Larios has a cannabis delivery license from the state, but Long Beach contends it’s not applicable due to the city’s established rules for cannabis operators in Long Beach.

In an appeal letter, Larios denied the accusations, saying he was merely allowing cannabis delivery drivers to use the location as a place to safely park for restroom and lunch breaks. The vans that city inspectors found with cannabis products were already loaded and were carrying out deliveries in the city, Larios said.

“It is no different than employees stopping at the gas station, grocery stores, convenience stores to use the restroom in the city of Long Beach, except they fall into a more dangerous situation during those experiences as they leave the vehicle unsupervised, possibly leading to a car robbery in sketchy locations,” Larios wrote.

Larios said Friday he uses the Atlantic Avenue location as a hub for all of his other businesses, including his delivery brand, DAZE, which the city alleges he was operating out of the Downtown office.

He has four other cannabis licenses to operate elsewhere in the city, he said, and another 16 that are in process. He said he is also a landlord to other cannabis operators in Long Beach.

Larios said he plans to offer some of his buildings to “social equity” applicants, less wealthy and sometimes previously incarcerated individuals who are trying to break into the industry but have said securing a physical location is a big challenge.

He said his license to deliver cannabis issued through the state allows his drivers to deliver to Long Beach and reiterated that his office on Atlantic never served as a distribution point. The building is currently under construction for tenant improvements.

“They went in and found a scale and some dust,” Larios said. “They don’t have any footage or photos of anyone moving cannabis out of my office.”

City inspectors tell another story that includes a December 2020 visit to the property after neighbors complained of a cannabis business being operated at the site after-hours, something the city said could be indicative of an intent to conceal a business from city officials who only work during regular business hours.

Inspectors said an attempt to access the site in December 2020 was unsuccessful, but Larios told inspectors they could return in a few hours after he found the necessary keys to allow them in. After inspectors left they received a call from neighbors that two white vans were quickly being loaded with boxes, according to city documents from a February 2022 hearing.

When the inspectors returned they found men still loading boxes into the vans, and one man, identified as one of Larios’ employees, dropped a box that spilled out cannabis products, according to the document.

City inspectors said they found an estimated 2,000 packaged and jarred cannabis products in the van and a scale and loose cannabis inside the building.

While Larios contends that no criminal amount of cannabis was ever found inside the building, Ashleigh Stone, a hearing officer who upheld city officials’ version of the dispute, said there was enough evidence to prove that an illegal delivery service was being run out of the property on Atlantic.

“Most compelling is the fact the inspectors caught a substantial amount of packaged cannabis product being actively removed from the property just after they requested to inspect the property,” Stone after the February hearing.

Deputy City Attorney Art Sanchez said that while it’s allowable for a cannabis delivery business located in another city to deliver into Long Beach, which creates somewhat of a legal gray area, the city believes that it can control what happens inside its borders, like limiting delivery operations to dispensaries.

That being said, Sanchez said he believes the activity that the city inspectors found at Larios’ Downtown location wasn’t compliant with his state-issued license, which Sanchez said he believes requires deliveries to originate from Davis, the city where his license was granted.

“They were packaging cannabis and delivering at that location,” Sanchez said of the Downtown Long Beach location. “He’s not even in compliance with the state.”

Larios said he believes the city ordinance is out of alignment with the state’s law and that he will consider suing the city if his license is ultimately revoked by the City Council Tuesday night.

“They’re trying to say I was running my legal business illegally inside my own building,” Larios said.

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