A successful referendum to legalize cannabis sales in 2016 limited the number of pharmacy licenses to 32, all of which were applied for.
The city council is considering creating new opportunities for “equity” applicants who meet certain criteria.
On Tuesday, leaders can vote for the city attorney to draft a new law that will allow additional city adult dispensaries to work in the city, which will include changes to park and beach buffers and an increase in the cannabis tax rate could include.
The recommendations that the council will consider were contained in a feasibility report recently published on the city’s website.
It called for a variety of changes, including a strengthening of the city’s code to protect equity seekers from predatory business partners and a 0.25% increase in the cannabis tax rate to pay additional staff to support equity seekers throughout their business operations.
The report suggested using a hybrid approval process that examines applications using a performance-based approach to determine which applicants are most likely to be successful, and then put those applicants through a lottery to determine who will get one of the eight licenses.
Al Austin councilor, who asked for a feasibility report in March to see if the city could create new licenses, said he was encouraged by the report. While he wants things to move as quickly as possible, he wants to make sure the city gets it right.
“I think we learned a lot about cannabis,” Austin said. “It’s an evolving issue of public order and we as a city strive to become better and fairer every day, like others.”
Edgar Cruz, who is keen to run as one of eight stock pharmacy owners, largely praised the city for its efforts to create those licenses, though he and others had urged more.
“We really need to understand the true definition of equity,” said Cruz. “There are 32 shops in operation and there are no black or brown shops and now there are eight. That is still not equity. “
Cruz said he and others would continue to push for additional pharmacy ownership opportunities for equity seekers in the future, but added that he was looking forward to Tuesday’s vote.
“We haven’t had the opportunity to have pharmacies out here, so it’s a big step to see how things go, even with all the drawbacks,” said Cruz.
One of the drawbacks that Cruz and the existing pharmacy owners pointed out was the proposed tax hike, which the industry has fought for years because of continued competition in the illegal market, which can charge lower prices because they don’t pay taxes.
Elliot Lewis, who owns several pharmacies in the city, including the recently approved one on Pine Avenue, said the existing operators are either facing rising debt or underpaying their employees to offset the loss of black market sales.
“One thing is certain, the legal market is not working in its current structure,” said Lewis. “Raising taxes is against any concept of social justice.”
Lewis said higher taxes could increase the possibility that stock pharmacy owners will fail because owners like him, who have better purchasing power and generally cannot make certain brands available to smaller establishments, will be more able to price them lower to offset the tax hike.
Lewis praised the city’s efforts to develop and expand the equity program and to take the time to listen and consider contributions from industry and the community, but called the proposed increase a “tax grenade.”
Adam Hijazi, president of the Long Beach Collective Association, agreed that an increase in taxes would be negative for the industry, adding that it would create pricing problems for both retailers and customers.
LBCA members are more concerned about taxes than new pharmacies that may reduce their market share, Hijazi said.
“It’s difficult, and that’s not because of eight more, ten more or five more pharmacy licenses, but because of the current market conditions,” said Hijazi.
Emily Armstrong, the city’s cannabis program manager, said employees believe the tax hike shouldn’t weigh too much on the industry, but the proceeds could support new positions designed to ensure equity business owners thrive.
“Our concern is to try to get them through the application process, but the licensing process could take years,” said Armstrong. “After they are licensed and operational, we still work with and support them.”
She said she hoped the proposed reduction in buffers to expand the city’s “green zone,” the areas where pharmacies can legally operate, may remove some of the leverage property owners currently have on applicants looking for one Looking for a location to open a pharmacy, Armstrong cited high rents and a lack of availability as one of the biggest hurdles to market entry.
“These are, so to speak, these golden areas in which they [owners] can pretty much do what they want, ”said Armstrong.
Hijazi’s Green Room on Seventh Street was the first cannabis dispensary to open its doors by the city after legalizing its sale in 2016.
He said he would like to see the buffers between pharmacies increase from 1,000 feet to 1,500 feet to avoid oversaturation of a particular neighborhood and that the new stock licenses can eventually sell medicinal cannabis.
Since the sale of drugs was approved by a vote, the city council only has the power to approve additional licenses for adult use.
A city memo said that adult sales account for about 95% of sales in the city, but Hijazi pointed out that medical cannabis is taxed at a lower rate – 6% compared to 8% for use by Adults – and that it gives more access to people who need more effective products to help with chronic diseases.
Allowing these new operators to sell medical cannabis would likely require voter approval, but Hijazi said it could be beneficial for the new owners.
“Whether it’s 5% or 10% of sales when you run a business, it can add up,” said Hijazi.
With the building of pharmacies in Long Beach, the city council could expand the cannabis storefront for stockholders
Report says Long Beach could create more pharmacy licenses, but it could require zoning and tax rate changes