Long Beach – Slow Licensing, Adult-Use Approved, and July 10th Council Meeting

Long Beach has finally lifted the moratorium on Adult-Use cannabis, which would seem to be a jump of joy considering the long delays in Los Angeles. Indeed, Long Beach has been “open” for licenses since September of 2017. However, in a recent City Council meeting held on July 10th, the City showed that out of the 32 dispensaries that were awarded priority or won the lottery, only 9 were fully licensed. Indeed, only 1 cultivator has been approved with 73 more pending applications; 1 manufacturer has been approved with 85 pending; 0 distributors licensed with 73 pending; 1 testing lab approved and 5 pending. With all of these pending applications, the City of Long Beach has moved at a glacial pace. Yet, they pushed forward and have several different updates to regulations.

The most important update comes from the fact that the state merged Adult and Medical cannabis at the cultivation and manufacturing level. As such, the City of Long Beach felt that cannabis businesses licensed under Chapter 5.90 of the Long Beach Municipal Code are strictly limited to medical cannabis activity only, since Measure MM was approved by voters with the expressed purpose of “allowing medical marijuana businesses to operate in the City of Long Beach.” Therefore, businesses that will participate in adult-use cannabis market are required to obtain an adult-use cannabis license from the City. If a medical cannabis business operates as adult-use, the City will decide whether to penalize, suspense, or revoke the license.

Another important change was the new Zoning Ordinance that went into effect on June 19th. Essentially, the zoning ordinance allows retailers and testing labs in commercial or industrial spaces. All other license types must be in industrial areas. If your business applied BEFORE the zoning ordinance came into effect, then you are not subject to the new zoning ordinance. Otherwise, you must now comply with the new zoning ordinance. Businesses that applied before June 19th who are not retailers have 180 days to apply for adult-use in the same location. Otherwise, they’ll have to apply in another location. Dispensaries that were approved by the City can apply to sell adult-use at any time. The new regulations also state that there will only be ONE license per address, meaning Long Beach is not friendly to type S shared licenses for manufacturers.

Finally, despite all of the warning stories, the City Council voted on July 10th not only to adopt the new adult-use cannabis ordinance but to also possibly enact a social equity program. That’s right! Any new applicants to the City of Long Beach will not be required to participate in a Social Equity program. Funnily enough, at the meeting, they mentioned other places where Social Equity programs were enacted: Oakland (failed), Los Angeles (failing), San Francisco, and Sacramento. In any case, the City of Long Beach is proposing the following criteria to qualify for Social Equity:

1) Annual Income below 80% of the Area Median Income and net worth below $250,000.
2) At least one of the following:
a) Arrested or convicted for a crime relating to the sale, possession, cultivation, or use of cannabis in Long Beach prior to November 8, 2016.
b) Live in a Long Beach census tract for a minimum of three years where at least 51% of current residents have household income at or below 80% of the Average Median Income

Individuals who are eligible for the Program may receive benefits in two ways:

1) Cannabis application benefits
2) Cannabis employment opportunities

Some of the proposed application benefits include fee waivers, expediated application reviews, expediated plan checks, tax deferrals, and access to workshops. The City Council proposed a 25% “Equity Hire” requirement for all adult-use cannabis businesses. To meet this requirement, businesses must ensure that at least 25% of the annual work hours are performed by employees who are eligible for the Program. Businesses will be expected to comply with these regulations by their second year of operation.

I hope you find this email helpful and productive. There are many changes, so I encourage you to check them out here:

http://longbeach.legistar.com/LegislationDetail.aspx?ID=3526278&GUID=A9827E09-61A7-42C0-A073-ACC694B1D5FD

Sergio Ingstrom
Senior Consultant