Why it matters: The city of Long Beach, California is working on establishing an ordinance that would provide tax breaks for cannabis retailers who are in good standing with their payments. The tax burden on cannabis businesses in California has been a significant issue, and several cities and counties in the state have already implemented tax cuts to aid retailers.
What they are saying: Long Beach City Council members voted to draft an ordinance that would lower tax rates for cannabis businesses that meet hiring and compensation requirements and are up to date with their tax payments. The goal is to reduce the tax burden on local operators, allow them to be competitive and expand their businesses, and reward those who invest back into the community.
The big picture: Long Beach currently imposes a 6% excise tax on medical cannabis and an 8% tax on recreational adult-use sales. With the additional city and state taxes, the tax burden on cannabis businesses is significant. The tax breaks aim to alleviate this burden and create a positive environment for cannabis operators.
What to watch: The ordinance is still pending final approval from the city council. If implemented, the tax cuts are projected to cost the city around $3 million annually. It will be important to monitor how the tax breaks affect the cannabis industry in Long Beach and whether they result in increased revenue and growth.
My take: The tax breaks being considered in Long Beach are a step in the right direction to support cannabis businesses and create a more favorable business environment. Lowering tax rates can help businesses compete and expand, ultimately benefiting the local economy. However, it will be essential for the city to carefully monitor the impact of these tax breaks to ensure that they are effectively driving growth and revenue for the city.
