LONG BEACH – Long Beach cannabis retailers owe the City millions in back taxes, according to a recent report provided to the mayor and city council.
City Manager Thomas B. Modica provided the jarring report during the May 23 regular city council meeting, which indicates that more than half of the amount owed is uncollectible.
According to the staff report, “On April 9, 2024, the City Council approved an ordinance amendment to reduce the cannabis cultivation and adult-use retail tax rate by one percent (or equivalent) and adopt a Pilot Tax Credit Program (PTCP). The cannabis tax rates were reduced from $14.96 to $13.09 per square foot under cultivation for cultivators and from eight percent to seven percent of gross receipts for adult-use retailers, upon the ordinance amendment taking effect. In addition to the one percent tax rate reduction, cultivators and adult-use retailers could apply for a three percent tax credit if they are in good standing and meet the eligibility criteria, for a combined four percent in tax relief.”
The ordinance established a payment plan for retailers before they could become eligible for the PTCP.
“Identifying new ways to support our local businesses and stimulate our local economy is a cornerstone in our economic development strategy,” said Mayor Rex Richardson at the time the program was created.
“This new Pilot Tax Credit Program will uplift our local cannabis industry and foster responsible business practices that support frontline employees.”
According to Modica, as of late 2024, 42 out of the 157 total delinquent accounts (equivalent to 30 businesses) were enrolled in a payment plan. Businesses were given the option to enroll in a payment plan of up to 12 months, depending on the tax amount owed and financial hardship.
“Unfortunately, 33 out of the 42 accounts enrolled in a payment plan have failed to meet the terms. Some businesses have requested payment plans beyond the maximum one-year term. Staff have explored the feasibility of expanding the existing payment plan term, but efficacy and impact are uncertain, considering the defaulted payment plans to date.
“Out of the $7.2 million in delinquent taxes, $4.1 million is considered unlikely to be unrecoverable due to the businesses no longer operating and the legal entity with ownership having dissolved. This leaves the remaining $3.1 million in delinquent taxes that is considered more likely to be
collected at this point.”
According to LB4D News, a Long Beach-based news site, the 2026 Long Beach City Budget is facing an approximately $7 million shortfall. The city is planning to close the budget shortfall by having city department heads develop cost reductions of about 1% in their departments.
A recent report from MJBizDaily, a prominent cannabis industry news outlet, cited that “operators owe more than $1.3 billion in unpaid taxes and related penalties, according to the State’s Department of Tax and Fee Administration”.
