Tax Relief Plan

Using a two-tiered approach, businesses may be eligible for a combined 4 percent in tax relief—while maintaining a two percent minimum tax rate—upon meeting a set of good standing requirements and eligibility criteria. The proposed Tax Relief Program requirements and criteria aim to address areas of community benefits, local hiring, living wages, and fair labor standards.                                                                                        

Tax Relief Plan Timeline 

March 15, 2022 - City Council directed City staff to investigate the feasibility of repealing the tax for cannabis cultivation (medical and adult-use) in Long Beach, including fiscal and workforce impacts.

May 10, 2022 - City Council directed City staff to prepare a report exploring the feasibility of reducing the City's adult use cannabis retail tax rate to align with the medical cannabis retail tax rate.

August 17, 2022 - Feasibility study findings were released to City Council in one comprehensive report with a staff recommendation and alternative option.

August 18, 2022 - City staff presented feasibility study findings to Economic Development and Finance Committee.

August 23, 2022 - City staff presented feasibility study findings to Budget Oversight Committee.

September 6, 2022 - City Council passed the following motion as part of the FY 23 budget adoption process: 

• Motion to reduce the adult-use and medical cannabis cultivation and retail taxes for equity businesses, and direct City Manager to come back to City Council with a report on how a potential rebate program would work where any revenues above $12 million would be rebated back to businesses who paid taxes with a prioritization on rebating back to cultivation businesses, along with an updated projection report to City Council on the status of cannabis revenues. This action will promote equity goals while not resulting in revenue loss from the proposed budget.

December 16, 2022 - Staff provided an update to City Council as part of the summary of the FY 23 Budget Adoption Actions on September 6, 2022.

• • Request the 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 FY 24 budget process.

• • Request the City Attorney to prepare an Ordinance to amend the Long Beach Municipal Code (LBMC) to reduce the adult-use and medical cannabis cultivation and retail taxes for equity businesses by half the rate set in Section 3.80.261 of the LBMC.

November 29, 2023 - The City Manager released a memorandum on the proposed cannabis tax relief plan.

January 23, 2024 - City Council approved Cannabis Tax Relief Plan.

• Recommendation: Recommendation to approve ordinance amendment to Section 3.80.261 of the Long Beach Municipal Code (LBMC) to reduce the cannabis cultivation tax rate and adult-use retail tax rate and add provisions for the Pilot Tax Credit Program, read for the first time and laid over to the next regular meeting of the City Council for final reading.
• Motion: Approve ordinance amendment to Section 3.80.261 of the Long Beach Municipal Code (LBMC) to reduce the cannabis cultivation tax rate and adult-use retail tax rate and add provisions for the Pilot Tax Credit Program, declare ordinance read the first time and laid over to the next regular meeting of the City Council for final reading; and adopt the Proposed Pilot Tax Credit Program chart attached to the Council letter with the following edits and additions:

1. 1. Strike the requirement to be compliant with California Department of Tax and Fee Administration regulations to be considered to be in “good standing”
   2. Add the two requirements set forth below to be considered to be in “good standing”:         
   • • Create a Special Circumstances Payment Plan that allows up to 12 months to pay outstanding taxes to be considered in compliance with the Long Beach Municipal Code.  This would create additional time for payment for those businesses that have special circumstances and need additional time to pay.  Those businesses would be considered in compliance with the municipal code (therefore not at risk of suspension for nonpayment)  if they pay every month. However, they would be subject to business license suspension if they default on the payment plan. In addition, they also have to have all of their quarterly reports submitted.
     • Require that businesses become current on their payments for local taxes before they are eligible for the Cannabis Tax Credit Program, with the exception that any business on the Special Circumstances Payment Plan of up to 12 months become eligible after 6 months of proven payments and all quarterly reports submitted.  This would allow businesses with Special Circumstances to participate after 6 months after they meet the other remaining eligibility requirements with demonstrated payment, but not be advantaged over other Cannabis businesses who have paid within the current 6 month time plan; and
   3. Require a thorough review of the tax relief program, including the impacts of these eligibility standards on program enrollment and participation, no later than six months from when the program officially begins.  This review should assess compliance and business application levels, economic impacts, and any unforeseen consequences, and the City Council will be able to propose any necessary amendments to the eligibility standards or the program design based on the review findings.

June 20, 2024 - Tax Credit Program Launched.  The 2024 Cannabis Business Tax Credit Application can be found here.