After Lowering Its Cannabis Taxes, Long Beach Saw a Windfall

The City of Long Beach raked in $10.3 million in cannabis tax revenue for the last fiscal year — more than twice the initial projection of $4 million. It’s a silver lining during challenging times, as Long Beach grapples with a nearly $20 million budget deficit.

The city owes much of its good fortune to cannabis’ designation as an essential service during the COVID-19 pandemic (statewide cannabis tax revenue nearly doubled during the same time period). However, cannabis-friendly policies that have attracted both businesses and consumers have also contributed to the windfall.

In 2019, the Long Beach City Council voted to lower the tax rate for cannabis businesses from 6% to 1%. That change took effect last year. Local pot shops say they’ve felt a boom from the lower tax rate. A city analysis now projects that some level of increased sales will continue in Long Beach.

Other cities have turned to lower tax rates as a way to support the legal industry. Desert Hot Springs voted to lower its cultivation tax earlier this month to make itself a more competitive destination for cannabis businesses.