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Cannabis Business Tax Relief Program / Tax Exemption / Temporary Local Tax Relief / Good Standing

Council File 25-1126

Introduced
2025-09-26
Last changed
2026-05-20
Status
open
Expires
2028-05-20
Committee
Budget and Finance Committee
Mover
JOHN S. LEE
Second
EUNISSES HERNANDEZ
References
City Attorney Report: R26-0297; R26-0295; R26-0296

Brief

Councilmember John S. Lee, seconded by Eunisses Hernandez, introduced a motion to establish a Cannabis Business Tax Relief Program providing temporary local tax exemptions for cannabis businesses that meet good standing requirements. The motion was adopted by Council 13-0-2 on April 15, 2026, making it final policy. The City Attorney subsequently issued related reports in May 2026 that are currently pending review in Budget and Finance Committee and Government Operations Committee.

Full summary

Councilmember John S. Lee introduced this motion in response to a deepening contraction in Los Angeles's legal cannabis market. Legal cannabis sales in the city fell to $19 million in the first quarter of 2025, a 20% drop from the same period in 2024, and licensed sales now represent only 38% of total cannabis consumption in California. Rising rents, construction delays, loss of capital, and a persistent illicit market have pushed many operators to the edge, a situation made worse by a state excise tax increase from 15% to 19% that analysts estimated could reduce pre-tax legal sales by an additional 6%. The motion points out that under existing city code, any operator delinquent on any city tax — regardless of the amount — is not considered in good standing and cannot renew a cannabis license, with no distinction made between a business that owes $100 and one that owes $1 million. The motion directed two tracks of action. First, it instructed the Department of Cannabis Regulation to report on how to revise the good standing provision as it relates to back-owed taxes. Second, it directed the Office of Finance, with help from the Department of Cannabis Regulation, the City Administrative Officer, and the City Attorney, to develop recommendations for a Cannabis Business Tax Relief Program modeled partly on San Francisco's suspension of its cannabis business tax, with options for relief periods of 3, 6, 9, or 12 months. The motion also noted that existing city code already allows payment plans of up to 12 months for outstanding business taxes, and suggested extending that framework as a baseline. The file moved through Government Operations Committee, which approved it in October 2025 and transmitted it to Budget and Finance Committee, which concurred in November. The full Council adopted the motion in December 2025. After a second round of committee review in early 2026, Council adopted the item again on April 15, 2026, by a 13-0-2 vote, with the action becoming final on April 20, 2026. Following adoption, the City Attorney transmitted a draft ordinance in May 2026 that would amend the Municipal Code to allow cannabis applicants whose annual licenses were cancelled before expiration to refile those applications, and to allow applicants at the time of refiling to pay — or enter into a payment plan to pay — previously owed taxes, fees, or fines. This draft ordinance, along with two related City Attorney reports, has been referred back to Budget and Finance Committee and Government Operations Committee, where it remains pending as of May 2026.

Activity (23)

  • 2026-05-20 City Attorney document(s) referred to Budget and Finance Committee; Government Operations Committee.
  • 2026-05-20 Document submitted by City Attorney, dated May 20, 2026.
  • 2026-04-20 Council action final.
  • 2026-04-15 Council adopted item, subject to reconsideration, pursuant to Council Rule 51.
  • 2026-04-10 City Clerk scheduled item for Council on April 15, 2026.
  • 2026-03-23 Budget and Finance Committee concurred with the Government Operations Committee's action of March 3, 2026.
  • 2026-03-19 Budget and Finance Committee scheduled item for committee meeting on March 23, 2026.
  • 2026-03-04 Government Operations Committee transmitted Council File to Budget and Finance Committee.
  • 2026-03-03 Government Operations Committee approved as amended .
  • 2026-02-26 Government Operations Committee scheduled item for committee meeting on March 3, 2026.
  • 2026-02-17 Government Operations Committee continued item to a date to be determined.
  • 2026-02-11 Government Operations Committee scheduled item for committee meeting on February 17, 2026.
  • 2025-12-16 Department of Cannabis Regulation document(s) referred to Budget and Finance Committee; Government Operations Committee.
  • 2025-12-15 Document submitted by Department of Cannabis Regulation, dated December 15, 2025.
  • 2025-12-10 Council action final.
  • 2025-12-05 Council adopted item, subject to reconsideration, pursuant to Council Rule 51.
  • 2025-12-02 City Clerk scheduled item for Council on December 5, 2025.
  • 2025-11-04 Budget and Finance Committee concurred with the October 21, 2025 action of the Government Operations Committee.
  • 2025-10-30 Budget and Finance Committee scheduled item for committee meeting on November 4, 2025.
  • 2025-10-21 Government Operations Committee transmitted Council File to Budget and Finance Committee.
  • 2025-10-21 Government Operations Committee approved item(s) .
  • 2025-10-17 Government Operations Committee scheduled item for committee meeting on October 21, 2025.
  • 2025-09-26 Motion referred to Budget and Finance Committee; Government Operations Committee.

Documents (27)

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