The Long Beach City Council on Tuesday unanimously plowed ahead with its efforts to regulate the city’s budding recreational marijuana industry, establishing how much businesses will pay to fund their own oversight.

Under city law, the new industry’s application and permit renewal fees will help cover the costs of regulating pot businesses, including for performing background checks and inspections. These fees differ from the marijuana tax rates set by voters, when they approved Measure MA in 2016, and it is the council’s responsibility to establish them.

On Tuesday, the council also set the fines and penalties for pot businesses that break the law.

Councilwoman Stacy Mungo, who represents District 5 in East Long Beach, said she’s glad businesses operating without a license will face a fine. But she added that she hopes the amount those businesses pay will be in line with the fines in other cities.

“I appreciate that there’s a penalty placed on those who are non-authorized growers in the city,” she said. But it’s important “ours aren’t just chosen at a lower amount or higher amount (than other cities) for no reason.”

A plethora of city agencies will oversee and serve the industry – such as the police, fire and health departments, and the city attorney’s and city manager’s offices – to ensure business are operating legally, according to a staff report.

The fees the council approved aren’t as high as those in some other Southern California cities, such as Santa Ana, which charges $1,690 in application fees and $12,086 in permit fees, the staff report said.

But Ivan Jimenez, a Long Beach resident who grows cannabis for his own business in Northern California, said he’d like to open up in his home city but he finds the fees too high.

“I would love to come here and invest money in the same industry,” Jimenez said during public comment. But “I believe the city of Long Beach is taking advantage of the taxing and taking advantage of the fees.

“The city,” he added, “seems to care more about fees than the business.”

City Budget Analyst Ajay Kolluri, who developed the fees, said they were calculated to account for “full cost recovery.” He said he couldn’t speak to how other cities devised their programs, and he pointed to San Jose as a particular outlier, which charges an annual operating fee of $131,846.

“It seems like our fees are more than fair,” said District 8 Councilman Al Austin, who represents Bixby Knolls and parts of North Long Beach.

Long Beach will charge $530 in application costs and from $6,476 to $8,091 in regulatory costs. Specifically, these businesses will pay:

  • $380 application fee
  • $150 background investigation fee
  • $2,840 annual license fee
  • $2,500 annual fee for businesses that do not qualify for the city’s social equity program.

The cost for annual fire permits varies based on the business type, ranging from $250 for dispensaries to $625 for manufacturing facilities. The cost for annual health permits differs depending on both the business type and the size of the building, from $886 for distributors smaller than 2,000 square feet to $2,126 for manufacturers bigger than 6,000 square feet.

If licensed businesses don’t follow the city’s cannabis regulations, they’ll be charged $100; the second violation will cost $200 and the third will cost $500, if they occur within a year of the initial violation. Unlicensed operations can be charged $1,000 a day and $25 per cultivated cannabis plant.

To this point, the staff report said, business-license taxes have not generated enough income to cover the costs of regulating new businesses, making these fees all the more crucial.

Long Beach has already accepted applications for 32 dispensaries — the maximum allowed under city law — although some have not yet opened. But the regulations the council passed last month did not put a limit on how many other businesses, such as cultivators and manufacturers, can open.

Under the new rules, recreational marijuana sales can begin as soon as Aug. 13.