Recommendation to receive a report from staff on the feasibility of the creation of a 24-month pilot program to expand the tax base of non-retail cannabis businesses by streamlining processes, adjusting tax rates, and providing incentives, and provide further input and direction to staff on development of a pilot program.
Great. Thank you, Congressman, but. Okay, fine. I close public speaking. Now we go to item 23. Item 23, would you please read the item? Item 23 Communication from Councilmember Richardson, Chair of the Economic Development and Finance Committee. Vice Mayor, Council Member Pearce says announcement. Yes. Yes. My announcement is I have to recuse myself since global investments is a source of income for me and they are an investment company with from the Earth cannabis. Thank you. Thank you. Okay. Ready? Could you. Could you please. We got. Item 23 is communication from Councilmember Richardson, Chair of the Economic Development and Finance Committee. Recommendation to receive a report on the feasibility of creating a 24 month pilot project to expand the tax base of non-retail cannabis businesses. Please, I'm going to turn it over to the staff. Thank you, Mr. Vice Mayor. Council members, we have a presentation by A.J. Curie, who is our cannabis manager. And A.J., take it away. AJ, I'm sorry. Good evening, Mayor and members of the City Council. My name is A.J. Hillary and I work for the Office of Cannabis Oversight in the city manager's office. I'm here to present the findings of a report requested by the Economic Development and Finance Committee on Non-retail Cannabis Businesses in Long Beach. With a clear. Thanks. On April nine, 2019, the Economic Development and Finance Committee requested staff to refer to the City Council a report on the feasibility of the creation of a 24 month pilot program to expand the tax base of non-retail cannabis businesses by streamlining processes, adjusting tax rates and providing incentives. In response to this request. Staff from the city manager's office met with departments responsible for regulating cannabis activity in Long Beach to solicit ideas for a pilot program. Staff also met with cannabis industry representatives to receive feedback on the current licensing process. Before discussing the findings of the report, I'd like to first define a few key terms referenced in the EDI and F committee request. First, what does it mean to expand the tax base? Expanding the base means increasing the amount of economic activity subject to taxation for the cannabis industry. This can be accomplished in two ways either increasing the number of licensed cannabis businesses in Long Beach or increasing the amount of taxable sales at existing businesses. Next, what is a non-retail cannabis business? There are four business types that fall into this category. Cultivators which grow and harvest cannabis plants indoors only in Long Beach. Manufacturers which extract essential oils from the plant and use that oil to create other types of consumer goods. Distributors which warehouse and transport cannabis products. And finally, testing laboratories which test cannabis goods for mold, pesticides and other contaminants. The common denominator for all non-retail business types is that unlike dispensaries, they do not sell cannabis goods directly to consumers. The next few slides are meant to provide an overview of the Long Beach cannabis market. This slide provides a breakdown of all proposed cannabis facilities in Long Beach and where they currently stand in the application process. As seen in the table of the 248 proposed cannabis facilities, only 37 have been issued a license to operate. The remaining 211 facilities are at various stages of licensing process, which includes zoning review, application review plan, submittal and construction. The vast majority of these pending cannabis facilities are for non-retail business types. Non-retail businesses in particular have moved slowly through the application process, hence the significant discrepancy between the number of pending and licensed facilities in Long Beach. This slide shows general fund cannabis tax revenues collected in FY 18 and estimated in FY 19, broken out by business type. As you can see from the table, the city is collecting more in tax revenues from dispensaries than from all other non-retail cannabis business types combined. In FY 18, 51% of all cannabis tax revenues were collected from dispensaries. The remaining 49% were collected from non-retail businesses in Fy19. Staff estimates this discrepancy will grow, with 75% of cannabis tax revenues coming from dispensaries, 25% from non-retail businesses. The main reason for the underperformance of the non-retail sector are twofold. First, the slow pace of business openings. And second, the fact that those non-retail businesses that have received a license have reported minimal gross receipts to the city thus far. In preparing this report, staff contacted cannabis businesses to better understand why non retail activity has not taken off. The most common responses are summarized on this slide. First, almost every non-retail cannabis business expressed concern over the tax rates charged by the city of Long Beach compared to other jurisdictions. Some non-retail businesses indicated they were considering relocating to other cities with lower tax rates. Second, some non-retail businesses have struggled to navigate the building plan check process, sometimes requiring multiple corrections and resubmit prior to receiving building permits to start construction. Third, some businesses underestimated the amount of capital necessary to construct a non-retail facility and have been forced to secure additional investments midway through the application process. Fourth, some non-retail businesses report weak demand for licensed cannabis products due to the limited number of licensed retailers operating throughout the state. And finally, some businesses have found it difficult to cover the inflated cost of real estate charged by property owners, who often demand a premium from cannabis businesses relative to other business types. Staff has prepared a set of options for the City Council to expand the tax base of non-retail cannabis businesses. The options are broken into two categories. The first category includes options that require changes to the Long Beach Municipal Code and therefore must be approved by the City Council. The second category includes administrative improvements that can be made by departments. As a result, departments already began implementing these changes upon release of the report. In theory, all of the options identified in the report can be adopted as a 24 month pilot, as required as requested by the EDF committee. However, there are some limitations to taking a pilot approach. First, businesses tend to avoid uncertainty when making decisions. The shorter a pilot, the less likely businesses will respond by increasing investment in Long Beach. Second, given the significant, significant amounts of volatility in the cannabis market, it will be difficult for staff to measure the impact of temporary policies , which is typically the purpose of a pilot program. Having said that, staff can implement any of the policy options identified in the report on a trial basis if requested by the City Council. The first option is for the City Council to direct staff from the Planning Bureau to conduct a study of cannabis building, design and zoning requirements . Once completed, the study will be submitted to the Planning Commission for review. The Planning Commission may then recommend changes to the Long Beach Municipal Code and refer those changes to the City Council for final approval. Through the proposed process, the Planning Bureau will be able to study and adopt best practices in cannabis facility design. Currently, adult use cannabis businesses are required to meet industry specific requirements relating to signage, window installation, exterior lighting, visibility and other important architectural elements. These requirements are meant to discourage the construction of fortress like facilities that detract from the overall esthetics of the surrounding area. For businesses, however, facility design requirements create additional costs during construction. Since passage of the Adult Use Ordinance, the Planning Bureau has gained a deeper understanding of the cannabis industry and its specific needs relating to safety, security, lighting, product, visibility and other aspects of cannabis business operations. As a result, the Planning Bureau is in a position to conduct a one year review and recommend improvements to the Planning Commission. The second option is to adjust tax rates for manufacturers, testing laboratories and distributors to a level determined by the city council. Generally speaking, the lower the tax rate, the more commercial cannabis activity will expand in Long Beach. However, at this time, staff is not able to recommend specific tax rates without further direction from the city council. The reason for this is that the ideal tax rates for each business type will depend on city council preference in the following areas. First, whether the City Council wishes to stay competitive with other jurisdictions charging lower non-retail cannabis tax rates. Second City Council's preference for short term versus long term general fund tax revenues. And third, the impact that a change in tax rates may have on other non cannabis businesses through an increase in demand for industrial property. I'll discuss some of these issues further in the next few slides. But first, some clarification on City Council authority to adjust cannabis tax rates pursuant to the Long Beach Municipal Code. City Council has the authority to increase or decrease cannabis tax rates by ordinance, subject to the maximum and minimum rates approved by voters for cultivation. The city currently charges a tax rate of $12 per square foot of plant canopy. The city council can increase the tax rate up to $15 per square foot or reduce the tax rate to $0 per square foot for all other non-retail business types. The city currently charges a tax rate of 6% of gross receipts. The city council can increase the tax rate up to 8% of gross receipts or reduce the tax rate to 0% of gross receipts. In terms of the competitiveness of tax rates, Long Beach continues to compare favorably to many jurisdictions in Southern California. However, there is one elephant in the room, and that is the city of Los Angeles. Los Angeles charges significantly lower tax rates than Long Beach for most non-retail business types. Thus far, the Los Angeles market has had a limited impact on business location decisions in Southern California due to a delay in implementation of the Los Angeles application process. This delay has prevented most new businesses from being able to apply for a cannabis business license in L.A.. However, that is set to change with the announcement of what they are calling phase three of the Los Angeles licensing program, which will allow for new businesses to apply for a cannabis business license. At that point, Long Beach may no longer be able to compete for new non-retail cannabis businesses locally. If competitiveness and the ability to attract new non-retail investment locally is the primary concern, then City Council may consider reducing non-retail cannabis tax rates to a level more in line with the city of Los Angeles. The second consideration. Is for a short run versus long run general fund tax revenues in the short run. Staff estimates that a reduction in tax tax rates will lead to a temporary reduction in general fund tax revenues. Specifically, staff estimates that for every 1% reduction in non-retail gross receipts, tax rates, general fund revenues will be reduced by $31,000 in FY 19 and $120,000 in FY 20. In addition, for every $1 reduction in the cultivation canopy square footage tax. General fund revenues will be reduced by an additional $28,000 in FY 19 and $58,000 in FY 20. The projected loss in general fund revenues assumes that in the short run, non-retail businesses will not increase supply in response to lower tax rates, nor will the pace of business openings in fy19 and FY 20 change as a result of lower tax rates. In the long run, however, it is far less clear what the impact of a tax rate reduction will be on the general fund. The main reason for this uncertainty is the fact that in the long run, non-retail businesses have much greater flexibility to adjust supply in response to lower tax rates. For this reason, staff cannot estimate long run impacts without collecting greater amounts of tax revenue data. In summary, if regional competitiveness is the main concern, City Council may consider reducing non-retail tax rates to a level more comparable to the city of Los Angeles. If short term revenue, if short term general fund revenues are the primary concern, then rates may be kept constant. Finally, if long term general fund revenues are the priority, additional data is needed to determine the appropriate rate structure to maximize revenues. The third option for the City Council is to direct staff to research the feasibility of allowing for shared use manufacturing in Long Beach. In 2018, the state of California created a new license category called Type S Shared Use Manufacturing. The license type allows for multiple manufacturing businesses to operate out of a single premise, with the requirement that only one business utilize the space at a given time. Allowing for shared use. Manufacturing could expand the tax base for non-retail businesses by creating new opportunities for less capitalized businesses to partner together to share in the cost of facility design, construction and operation. However, should the City Council decide to pursue this option, staff would first need to complete a study identifying the resources needed to regulate this business type. As part of this study, staff would contact other cities in California that currently license shared use facilities. Once finished, staff would refer the study to the City Council for additional input and policy direction. That concludes the set of options requiring city council approval. In addition, staff identified a set of administrative changes to expand the tax base of non-retail business types. Departments began implementing these administrative changes following release of the EDF report. This includes adjusting the timing of the initial cultivation business license, tax payment to be due later in the application process, creating application flowcharts and inspection checklists to help applicants better understand and navigate the application process. And finally, closer coordination with Southern California Edison, who we met with during preparation of the study and identified some areas where the utility upgrade process could be streamlined. I have included a summary of items discussed in the report on this slide. I'm happy to go into more detail on any of the items if needed. That concludes my presentation and I am available for questions. Thank you. Thank you very much. First, we go into public comment and then we'll. Come on, guys, would you please line up if you want to speak on this item? Larry Goodhew. As I've referenced before, my views of. Cannabis is in the same level as sex trafficking. Period. My views on it, I think I've shared this before or shaped back in the late sixties or early sixties when I would work up in Maine during the summer at a. Nice Resort hotel where every year General Paul would rendezvous, who is Ike's chief of staff with his Oasis buddies, and reminisce about those days and so forth. And one of the things this was back at the time that Timothy Leary was advocating LSD, and he pointed out and he to all the people my age and even of people older, how dangerous that was. He's pointing out that LSD was so dangerous, even the Nazis. Would not deal with it. So far, so unstable. Is it so unstable? And that's to have shaped my view. And it's absolutely the same view with cannabis. It's this city. Certainly should have. I know we've got some dubious leadership. There's no question of that. And, you know, we don't have to do that. But there should be enough solid citizens in this city. Sitting behind this council. And those with proper elections will get you get a full council with. Good mental stability to figure out how to meet the financial challenges of this city. Without getting into the drug business, which is essentially what you're doing. And don't try. Try. Tried to try to dance around it. It's no ifs or buts. It's a it's a dangerous road you're going to travel down. So I would suggest you do your research and diligence and find out just how dangerous the drugs can be. And then figure out a way how to. And I think we will get, as you referenced earlier, we're going to get some federal money, considerable federal money to help the city and dealing also with the crime issues. Thank you. Thank you. Next speaker. Good evening, stephanie Dawson. So Second District. Thank you again for your attention to this issue. Crafting good public policy takes time and constant bickering, and I'm glad that we can cordially address these specific issues where we can make the system better work for everybody involved in the city. When voters approved measures made in this earnings council later passed, I spoke to Municipal Code Section 5.92. It demonstrated the city's collective decision to create a highly regulated local monopoly for commercial cannabis, including these policies, were a strict commitment to preventing underage sales, enacting labor standards and unionization, ensuring purity of products at the local level. Given the absence of the FDA in this matter and providing local tax revenue to offset any increased regulatory burden on the city with regards to the taxes, it must be said that this local industry here has been consuming, has consistently more in the city about the highest tax threshold placed be a major may specifically were concerned regarding a consumer choice to participate in a local licensed retail market and be preserving a competitive advantage for non-retail businesses in this city. As it stands today, businesses in the city are suffering both points and immediate moderate as modernization is necessary. We've seen similar actions in Oakland, Berkeley, West Hollywood and Palm Springs, all of which are either in the process of drastically reducing their tax rate or already have done so in direct response to the falling wholesale price at the commodity level for commercial cannabis. With regard to the specific regulatory burden, I think that Mr. Corey's department is deserving of praise as well as the rest of the your bureaucracy, for doing their sincere best to keep these projects chugging along despite constantly changing regulations at the state level. However, it is also clear that the fire department specifically is dramatically understaffed for this work, specifically in licensing volatile manufacturing within the city. The opposite seems to be true with regards to enforcement. Despite dozens of officers assigned and funded for the four narcotics abatement, it seems that very few, if any, misdemeanor charges or municipal code violations are being filed by the Long Beach Police Department or the city prosecutor. Despite the flurry of unlicensed scab delivery services currently selling untested marijuana to any child capable of operating a smartphone, again, thank you, council members, for your willingness to continue sharpening this policy and seeking out ways to improve it. Please modernize the total local local tax system in a manner that increases the competitive edge for licensed businesses. Please allocate additional forces in Long Beach fire departments so we can complete the inspection process for the manufacturing businesses. And please direct the city prosecutor and code enforcement to follow similar campaigns in the City of Los Angeles and the city of Anaheim against unlicensed delivery services who are selling untested marijuana to children. And with all due respect, the pilot program is not broad enough in its scope or fast enough to address these systemic issues. We need an expansive and thorough approach, including reforms to the retail rate. Thank you and have a nice day. Thank you. Thanks, Speaker. Dear City Council. My name is Hab Hadad. I am the CEO of Greenpoint Holdings. We are a cannabis manufacture and distributor located in District nine and on the border of District eight. We wanted to take this opportunity to thank you, the City Council, for being proactive in reviewing the burdensome tax code placed on cannabis businesses by local and state regulations. We wanted to thank you for broadening the tax base and allowing cannabis businesses and the industry in Long Beach to evolve into the great industry it can be. We want to bring a few points to your attention as you consider this topic. Cannabis is taxed at every step in the supply chain. Do not tax the supply chain. Manufacturers, distributors and testing labs should have a lower tax base to keep the entire pricepoint competitive at the retail level. This will curb the underground market. We recommend evolving the tax base to be competitive with neighboring cities, let alone the entire state. For example, the city of Oakland has recognized us recently and modernized their tax base to help small businesses compete. Los Angeles does not burden the supply chain with aggressively high tax rates. Companies have already started to exit Long Beach as a result of the high distribution tax. GROSS receipts needs to be redefined. The way that Long Beach defines gross receipts is oppressive to businesses. Cannabis businesses need to take the cost of goods deduction in order to stay competitive, let alone survive. Oakland voters, for example, approved Measure V, which amends the tax code to allow for cannabis manufacturers and cultivators to deduct the value of raw materials cost of goods sold when calculating their gross receipts. In Long Beach, under the current definition, when a distributor facilitates testing and is reimbursed for those costs, the city would tax them at the entire transaction, which would net the distributor losing money. Distribution businesses typically charge 10 to 20% for their services. So for the city of Long Beach charge, 6% on gross revenue realistically means they receive 30 to 60% of earnings before income tax, employee wages or expenses. Long Beach is not attractive until we fix the tax rate and cost of goods sold deduction. Thank you for your time and considering an evolving our cannabis business tax rates. Thank you. Thank you. Well before the next speaker, is anyone else Spanish speaking? We're close enough to speak English right now. No one else. Okay, fine. This is the last speaker. Hello. My name is Stacey Loucks. I want to thank vice mayor in the council for meeting with us tonight. First of all, I'd like to also thank the city for the research that was done to put this report together. I get asked quite often why there aren't many more manufacturers open and running. I manufacture license here in Long Beach. I got calls from AJ. I got calls from other people in the city. The research was done. And so I just want to thank you for the for following through with that and saying we would do our research and dove into it. So thank you for that and other members of the city to the help that we get on the fourth floor. It's not always crazy there. We did get some support there and seventh floor, too. We do get some great support. Like I said, I'm a licensed manufacturer in Long Beach and to my knowledge, there's only a few handful of us that are open and operating. There are other licenses issued, but a lot of them are not open and operating. I'm asked often as to why they're not open and operating included by the city. I was asked that the expenses of licensing filled out equipment purchases. Legal and compliance issues are certainly the first hurdle, but not the last. The limited number of licensed retail outlets which result in less places to sell our product has obviously changed our model significantly. Price increases due to taxes and other compliance issues have driven people to the black market. And that's not good for any of us. Many of us, many people have just simply run out of money and cannot operate with a five figure loss every month. In the supporting documents for this agenda item, there were two estimates for cannabis revenue tax for manufacturers. One was 78,000, the other was 17,000. Based on the number of operating manufacturers, I don't know which number is correct. However, based on that the number, I would suggest that is probably closer to the 17. Just to give you some perspective on that number. I personally have already paid $10,000 and I saw two more quarterly payments that I have to make this year. I'm currently losing $50,000 a month in my business. I think Long Beach has one of the most well-thought out and fair social equity programs, and I am proud to say that we have completed the orientation and certification for this. We would love to be more involved and benefit more individuals, but the reality is we cannot afford to hire them. Instead, I worked 70 hours a week wearing many hats. I would like to point out two potential issues with the agenda item. The two year pilot program will cause businesses to think twice before setting up shop in Long Beach. Cannabis businesses need to be able to operate on a five year plus plan. The investment is very significant and the returns are very slow. Most will not be profitable for 12 plus months. Second, the recommendation that cultivation be excluded is not in the best interest of the cannabis cannabis industry or expanding the tax base. Cultivation is where everything begins and we need the starting point to have financial stability as well. Again, I appreciate all the efforts of the City Council said in city offices for taking the time to dove deeply into this issue. We are facing and addressing these issues tonight in the meeting. Thank you. Thank you so much. Thank you. Thank you very much. Let me turn this over now to Councilmember Richardson. Thank you, Mr. Mayor. And thank you all for for attending. I want to start with just thanking staff, including Deputy City Manager Kevin Jackson and AJ. I don't really know your title, AJ, but you're the czar on these issues. So thank you for taking your time and particularly the really good outreach. I know how seriously you've taken this issue and you've learned a lot, and that's clear. And you're very, very open and transparent about the things you've learned since we took this step forward, since adopting this this this ordinance. So just in terms of the process here, you know, this you know, this issue has been raised over the last few months. And the idea here is this is a big, big issue. It's not simply something we can place on the agenda and move forward. We're going to need a number of levels of review. And the council has talked about doing a lot of work in the appropriate committees. When we talk about taxes and and growing taxes and the bottom line for the city, the appropriate committee, city council committee is the Economic Development and Finance Committee. And so we took up this issue. And, you know, and the idea here is we want it to go over a basic overview of the facts. We can't make policy changes at the committee level, but we can begin with a high level overview of the facts. So we asked city staff to take a look at the facts and sort of break out this issue into something the city council can deal with. And they have they've come together with some changes that need city council direction in order to take that next level of review and then administrative changes that they can move forward with administratively if the case is made. And I think that's what's happened here. So I want to thank staff for seeing the distinction between the things that need further city council review and the things that just simply make sense because they were asked to talk to the industry about making those changes. So that was sort of step one, the community committee high level review. And so we've asked for this broad conversation and this study and that moves now to phase two. It's been referred to the city council. And what you get is instead of just a simple agenda item from a council member saying, look at this, now you . Have a lot of. Facts and data and details to begin to look. At. And the city council can now, you know, the committee has limited power. We can't ask for full review. The city can now say thank you for doing that high level review, go ahead and conduct a further fiscal impact on this or the Planning Commission review on that. And so that's where we are today. The idea is that next, after, you know, we get past this next level review, all the things that require city council action will come back and we would adopt changes based on that next level of review. So if anyone's confused about it tonight, we're not actually adopting anything tonight. We're taking these questions that are really organized by staff and taking the next step of a deep dove and asking staff to go back and connect that conduct, that next level of review that's been happening tonight. So there's been a lot of questions and and I'm thankful to my colleagues for raising some of these questions. And I had a chance to kind of warm up on some of this earlier today. Why retail versus non-retail? Why not retail versus retail? Right. Why the non-retail? Why are we tackling non-retail versus retail? And there's a number of reasons why it makes sense to address this in this way and to start this conversation with non-retail number one as a political issue. The retail businesses have been a political hot, hot button issue for generations of this council. And it's really comes down to a real need to protect the quality of life or any perceived impacts to the quality of life to residents that are brought into a neighborhood with a dispensary. And so sometimes we can't even get to the substance of the conversation because of the impact of a dispensary. What we're going to do, some dispensary, we're taking that and setting that to the side. We're talking about the part of the industry that largely has zero blight impact or neighborhood impact because they're not dealing with customers as residents there. These are business to business manufacturing entities and sort of upstream supply chain industries. So let's make that clear. We're not talking about dispensaries tonight. Secondly, it was brought up that we have this you know, it was brought up that we have a robust cannabis equity ordinance. Many of the economic opportunities associated with this industry are not with the dispensaries. Much of the economic sort of benefits are with the supply chain and the upstream businesses. These are these are jobs. These are union jobs. These are prevailing wage jobs. And this is the segment of the industry that is really stalled. And that's, frankly, the part of the industry I'm most excited about. And when we say stalled, we're talking about 37 out of 211. And we know that in conducting the staff review, staff said it today. The number one message coming back from the industry is number one, the check, the challenges with our ordinance as we're learning. And two, the tax rate associated with the non-retail businesses. So number four, why why why focus on non retail? Well, one, we've learned a lot in the last year or two. For example, this conversation about type s didn't even exist when we started this conversation. And state law has changed and the industry has learned and our staff has learned. And so we know that sometimes these new industries and these big issues need to be tweaked. And so this is why, again, focus on non-retail. And then and then lastly, I'll say, if this were any other industry, I don't know that we would have, you know, a tax structure that touches every single level of the industry. If this were if we were manufacturing other things, I don't know. You know, I don't know that it would be treated in such a way. And my I never really expected a huge windfall of taxes. I would love to see that. But what I see when a new industry comes in, I want to see that we milk all the economic benefits, including the jobs and most importantly, the jobs and opportunities to sort of invest in that that industry and that. And those are the opportunities that really haven't really taken root. And so so to kind of wrap my comments, I want to go through. So my hope today again, is the things that we know need further review and direction from council. We can start giving some direction on that next level of review. And I want to start going through that, some of that right now. So let's start with there were broken into sort of the changes that need direction from council, the options and then the administrative changes. The administrative change has already been handled. So we're just talk about options one, two and three. So option one really focuses on the facility design and zoning. These are non-economic issues. These are things that we learned through the process. Our intention was simply to make sure that things don't look a certain way or don't look like fortress fortresses. And and it's a good thing and we support that. But we've learned that there are some challenges with, you know, installing, you know, $6,000, $10,000 windows simply to just put plywood over it because it's a factory. And you wouldn't just put a, you know, window at a certain wall and factory and some of these planning standards could maybe be changed or tweaked. And so option one is requesting us to further send this collection of issues that's been reviewed at, you know, economic development. And now here, send it to the Planning Bureau and the Planning Planning Bureau and those folks in the Planning Commission to do what they do, take this feedback and come back to city council with something that's actionable. And so in terms of option one, it's not economic. I think that's something we can move forward with tonight. So within the my motion, I'd like to move forward with option one. And then the other thing that really is non-economic is option three. So if we look at option three, which begins on page 16, the shared use manufacturing, this is something that, you know, we have a shared economy. This type license didn't exist in the state when we started. That's something that we simply need to evaluate. So option three asks us to ask staff to go ahead and began researching the feasibility of option three. So again, it's not economic. If anything, it may be able it may be some opportunities for us to grow business here. And so I want to move forward with option three, which again will return to the full council as staff has the opportunity to evaluate the feasibility. So I want to begin with options. I want to also include option two, an option to into the motion. I mean, option three. And so the motion now as we get to option two, this was a high level review, right? We had we didn't do a full fiscal analysis on the tax rates yet. What we're able to do is really kind of break out, see what's happening across the region, understand what's happening with phase three, with the city and with phase three in the city of Los Angeles. And really take this time to understand fully what the industry is talking about. And so the idea here why it came to our committee is we want to expand the tax base. And so and the premise is the premise here is that if we have a you know, if we have a more competitive rate, we may see more than these 20, 30 businesses adopt, you know, roll out. But maybe we see a full, you know, a full adoption and roll out of these businesses, which creates more jobs. And so what they need from council here is further direction on what are some buckets of rates to do a full economic get full fiscal analysis on . And so I think that we need to take a look at a fiscal analysis of something that's in line with the city of Los Angeles and bring us some options. I think we need to look at 1%, 2%, 3%. We need to do a fiscal analysis on all three of those, bring them back to council so we can make some decisions. And that and with that analysis, one thing that is missing that I'd like to see is if what's driving this for me is jobs, I'd like to see a job. I'd like to see an expectation of if we're able to ramp this industry up, these types of businesses that have very little impact on our neighborhoods, but high sort of economic impacts and job creation impacts. I'd like to see what the projections of job creation is. If we if we are able to get 50% of these permits through or 75% or 100%. So I'd like to see a real projection or forecast of what the job creation numbers are so we know what we're getting in exchange for a tax rate that's that's diminished, that's lower than what we initially set out. And so I'm certainly open to hearing more from the city council, but that's the framework of my motion. It's option one, option three, and then come back with fiscal impact on one on 1%, 2%, 3%, with also a jobs impact to the city council. So we can have the next level of of the discussion to make a decision. And so that that's my motion. Thank you. Thank you. Councilmember Vice Mayor Andrews. Yes, thank you, Mayor. And I want to thank Congressman Rex for bringing this forward because being chair of that committee. But, you know, a lot of things that I'm seeing and hearing is that these individuals. I put together a business for people that can. Getting things done in the city of Long Beach. I don't like to do that. We want to take a look and look at other individuals because most of these individuals who are doing business, they're very intelligent individuals because these are businesspeople. And I think we as the city of Long Beach are going to have to really get up off our butts, make sure that these people be able to do what they're planned in doing, what they've waited for many, many years and gotten this start started. So by getting this thing started, we're going to have to be very considerate and understand that the tax that we're putting on these individuals are making it almost impossible for them individually to do what they're supposed to do. And that's. Now. I'm not the guru on this. I'm just telling you what I feel and see. You know, the council is an industry which potentially could bring in huge new revenue to this city, but only if the cannabis industry can locate their businesses here. You know, as we find out, the industry has many different components manufacturing, testing, distribution, as well as retail sectors. Each of these sectors have their own special needs and require to open up and get established. Our audience, unfortunately, really doesn't seem to fit. Non-retail business. Further, our planning and zoning code should be looked at and ensure and not turn business away unnecessarily. We need a city manager review that we are doing as a city to recommend as a way in which we can ensure and capture the revenues and the opportunities for the jobs our citizens need. So this key, bring it in, look at it. I mean, how long have you guys been at this? I know you know what you're doing. Everyone knows that. The longer we wait, the more the underground will take. So I just want to let you guys know. Thank you for being here tonight. BECK. Thank you, vice mayor. Next up is council woman Mungo. First, I want to thank the czars of marijuana. They've been available to our calls at any time. I know that working hand in hand with the dispensary and facilities in my district, I've had a lot of calls, not only to them, but but an extensive amount of calls also to Lynda Tatum and our development services. And for that reason, I have personally seen requirements that just don't make sense related to you need to put a window here. There's three fronts to this building. You need a a sheer wall and there's a window. So how is that going to happen? And then you talk to the contractor onsite and they're like, that's an extra $30,000. And then the neighbor who lives next door is like you told me, they weren't going to have a window and now they are going to have a window. What the heck? And so I'm super supportive of option one. The requirements are too cumbersome and often confusing, and I know the fourth floor is very supportive as you go from desk to desk, but it really needs to be more of a one stop shop to each of those desks speaking the same language and coordinating, because sometimes you don't know the impact of the move that you're making until you get to the next desk. And that's another $30,000 and that's just not acceptable. Option two I'm supportive of a fiscal impact study. I think that when we look at page, um. Whatever it was. Here it is, page 14. If we talk about $178,000 of revenue per percent, a 1% reduction in the rate of 170,000, a 2% reduction would be 300 and 400,000 and so on and so forth. I think that it's important to think about over time what have we invested that money in and where do we see the long term implications? So currently we've invested about $1,000,000 into a heart team. Heart team that I think has been impactful for all of us, a quality of life team, a clean team, and a health outreach team. All homeless related services, which was the intent of the bill. I think that that also helps the community. I think that it's also important to discuss if the tax rate went down, would that even impact the number of people interested in coming to Long Beach? Because from what I'm hearing today, there are more interest than there are facilities. So there are a certain number of vacant facilities in the city, and many of them will not take a marijuana use. Others of them are through a bank that won't allow a marijuana use at the facility because they hold the title. We've had a couple of discussions about those. I'm interested in what the others are. And so in the fiscal impact, I know that our vacancy rate is super low. And so I'd be interested in knowing we want to expand the tax base rate. So instead of having ten people burden 100% of it, we'd rather have 20 people and 50% rate lower the base by 50%, but have the double the number of businesses. I don't even know if that's possible. So I think that it would be great if our marijuana czars could work with the. Either those in the industry, the brokers on the industrial commercial side and or EDI and F are economic government department to to better understand where we could help and support. Are the buildings not facing the right direction are they? What is the missing step of why there's still a vacant building in the city? And then I would ask, what would the other use be if it was not marijuana? And I think that people aren't always aware of what high paying jobs are in the industry. And so when you talk about it, if you have like an Amazon factory or a marijuana dispensary, how many jobs are at each of them? Because I don't see a lot of robots doing work in cultivators in cultivation facilities versus I see that more in the automation that we're moving through in the manufacturing side. But. It's a good question to ask because I don't know how many people work in a cultivation site. I just don't know. I have two in my district, but I've not seen a lot of people at those facilities going in and out of them. I don't know how many jobs they are. I don't know what upgrade they are, and I don't know if there are more jobs or less jobs at, say, a plumbing warehouse that has 70 plumbers that work out of it and help the community or a cultivation facility. And do cultivators make more than plumbers? I just don't know the data, and I'd be interested in that. I also think people forget that in the marijuana industry there's a created career path. Often when we have a dispensary opening in my neighborhood and one of the discussions was, Wow, it starts at a pretty reasonable price. And I get a 50 cent raise every six months or a year until I reach X percentage. And wow, I didn't know that I had a pension involved in these other things that people are looking for in jobs. And so I think that that needs to be included in the study. So even if there is a slight variance between one use and another, what's the total impact to the economy based on jobs and those facilities? And then. What would the other use of that facility be and is it even taxable? A lot of our first tier manufacturing is wholesale. Some of that is taxable. Some of it is not taxable. Some of it is service goods. When you have a drain cleaned, you don't get a tax on that. But if you purchase a product like a drain that actually is installed, then you actually have a tax base. And so I just think it needs to be a robust look. And does the tax rate decrease or increase really make that big of a difference in the total? I think that at least when I ran a business, one of my biggest challenges was cash flow because of the upfront investment. And so I didn't hear the maker of the motion make any direction related to the administrative changes at the end. We don't have to we're just going to move forward with that because I think the timing of the payments, how often you have to pay, all of those things are also a really big impact to a business owner who at the end of each month literally needs to sign checks for people to get their paycheck. And that's important. And so I'm very supportive of these administrative changes and better coordination with Southern California Edison. That has been a barrier on multiple properties in my district, not just marijuana related. And so I hope that those will be lessened. And then option three, while I don't really understand it, it sounds like a good idea, but I think I need to meet more with staff. I go the council members comments to date, but I'd like to better understand the specifics because I just it's a lot of nomenclature and terminology that I'm not familiar with, but it seems like something that would would be a good direction to go in. Thank you, Councilwoman. Councilman Austin. Thank you very much. First, I'd like to just appreciate the E.D. and that committee for bringing this issue to the council for discussion and consideration. I've had several conversations with some of our advocates in the community and in researching this issue for quite some time. Watching trends throughout the state with state legislation just came back from Oregon. Some interesting things are happening up there. And I love the issues that come before us that challenge us to think about today, but also the future. The cannabis industry is now legal in California. The voters in Long Beach have spoken loud and clear, as well as in the state and as local policymakers. I think we should be striving to make policy that is flexible and we're bending with the curves, particularly with this new industry, that that is changing still by the day. I'd like to make. And I think this proposal before us and what Councilmember Richardson's motion does is give us the opportunity to make some adjustments that allow our local businesses to be competitive and to succeed. We talk about often creating good jobs in this, and I believe this industry has a potential to do just that in the future as well. We have to, I think, be focused on and be very deliberate about facilitating an environment that's conducive to creating economic prosperity in our city, for our businesses and the jobs that they will create. And I also think we need to be looking at the long game. I think it's just a matter of time before the cannabis industry is legal on a federal level. Right. And I think supporting manufacturing here in and here in Long Beach, maybe put put us in a position to be ready for that long term. And so particularly those states, I think 11 states where it's legal, where we have the infrastructure, we have the manufacturing capacity. Once that happens, there's going to be economic benefits to our local economies, but our state. And so I think our businesses obviously are depending on us to get this right. Our consumers are depending on us to get this right. And the employees whose jobs are are dependent on this industry are depending on us to get this right. And so this is an economic development decision before us that that that I'm going to support wholeheartedly. And I really like option one. When I look at this table, I see. Two three cities that that connect. They have borders with Long Beach, Los Angeles, Carson and Bellflower. And looking at the the retail rates but not only that, I guess we're looking at the non-retail, but those rates are I think we need to be doing I think the proposal before us puts us in a position to be competitive with with all of those those those cities. And we have to look at it from strategically that way. I do like and I'm intrigued with the option three, so I look forward to hearing more about that. And then certainly I think a job analysis is merited with the option to. I still would love for the social equity piece to come back because I have some ideas about that and I don't know if this is the appropriate time to talk about that, but I think we're we have not discussed that. And I'm talking about it now. We have not talked about, you know, gang intervention and prevention programs in terms of social equity. We've talked about it from a job component. But when it comes to, you know, the profits that are that are coming from from this industry, I think it would be really, really wise for us to look at that direction as well as I look forward to having some further conversation about that. But looking forward to supporting this this evening. Thank you. Thank you, Councilman. And just let me go to Councilmember. You just I want to make sure I had a request this also just to clarify the exact motion. And so let me clarify please correct me if I'm wrong on any of this. The motion currently, as it stands, is to basically take option one and for that after the planning commission so they can begin to do the work on those recommendations as kind of outlined by staff. Then to take option three and to basically ask staff to come back with recommendations and to examine that as as a possible see the feasibility of option three and bring that back to the City Council for for discussion. And then to take option two and four have to have staff do both kind of a fiscal and job analysis on option two and to come back with options that are within the range of of Los Angeles, which I believe the councilmember said between one and 3%. So I think I got the motion correct, but I get any of that wrong. I agree that the job impact, fiscal impact in one one, a 1%, 2% to 3%. Okay. And those would those would come back to the city council. Right. Okay. And I think that was I will ask Vice Mayor Andrews, just ask just to clarify the motion. So obviously, we we I know that the planning the the vice mayor part one, which is the planning to go to potentially planning to staff and then measures. And that will kind of go through that process through the Planning Commission, I imagine option three, that piece of it and the option two piece of it. What do you think the timing would be from staff on that? So for option one, which was. Well, we're actually I just want to I just want to understand not the planning commission piece, but the piece that that that that that our staff would have to do on option two and three. Would either of those come back first or to where they both come back at the same time? What's the timing on that? We'd probably be able to come back with option number three more quickly because I suspect from number two, which is that the tax analysis, we would probably have to hire an outside consultant to assist with the level of detail that city councils are requesting. So I don't know how long that might take, but option number. Three but you can get you can get back to us on the timing pretty fairly soon at least. So we know the timing. Yeah. Okay. Okay. Thank you. Let me let me just I just wanted to clarify the motion. Just let me continue with the with the with the council members council meeting. Thank you. Just for a clarification that we started out in the beginning with the possibility of a 24 month pilot program. So I guess, Councilmember Richardson, where are we with that? Is it still in place? Or do we want to look, consider a shorter period of time or a longer period of time? What's the what's the viewpoint on that? So though the viewpoint is I like 24 months because it gets us going into a pilot and if we want to make it permanent, we have the option as opposed to, you know, starting off with a permanent change that may change in the future. And so so I like the concept of a pilot respecting that. We heard all the concerns about it. I like the concept of a pilot. Well, also in that discussion that the staff brought forward with the 24 month pilot program, they were also concerned with the fact that it might not really be helpful to the industry, because there's so many unknowns in regards to having a 24 month program as opposed to having maybe a longer view for them to consider what's happening in Long Beach and all the changes and recommendations that we're looking at implementing. So I'm more in favor of extending that if it's a pilot program or basically just make it. Nancy, let's adopt a program that lets adopt a program that we're looking at for a permanent establishment. It's opposed to a pilot, but. I think it's time to have a recommendation because I'm flexible. Okay, I'll leave that to you. One of the other things one of the things that that I have here is is a somewhat unique perspective on this whole issue. As many of you know, I also serve on the Coastal Commission and cannabis growth and manufacturing and distribution has been a big issue along the 1111 100 mile stretch of California's coast and the establishment of not only manufacturing distribution, but growth of growth along along the the coast, in outside the locations not not only inside of case in point is a very large I don't want to call it a plantation, but a growth area after the Santa Barbara coast and up there and all the all the. Issues that that brings along with them. And that's including your employees union jobs at all at all parts of the of the chain of of getting cannabis ready for market. So the I think that in terms of the employee market, I think it's there. I mean, it exists. We're just not having a good handle on as far as what it would take for here in Long Beach. But so I think that the jobs basically are going to be there. Some might be automated and and can lend itself to automation, some aspects of it, but certainly not all. And so I could see I consider this as a job maker. And just like anything else, it's a it's a manufacturing, it's a new business. It's something that we're just getting into the the the tip of the iceberg, if you will, of an industry that that is new. And when I look at this chart of the report, which is an excellent report so far, that's that put together, you know, looking at already only 37 out of 248 applications being accepted. You know, that's 15%. And we've been going at this now for at least, what, two years that we adopted our our plan. And everybody who looked at law was saying, you know, language is really at the at the forefront, cutting edge of of marijuana licensing. But I see 50%. I see. No, we're not. We've got a long way to go still. And there's too many applications out there still hanging on the edge at all levels. So the time I'm talking about zoning and planning and building and those that are under construction with 53, which I hope is I hope they do finish. But in terms of what I was saying earlier with with the with the Coastal Commission, I've had an opportunity to visit a number of cannabis growth, distribution and testing labs up and down the coast from Arcadia to to locally to here. And I see a lot of people doing work in there. And, and I've seen the product itself in regards to its per in particular, it's always the, the big emphasis of the medical benefits that cannabis has. So I see this as something that is growing and we need to get behind it. I think that Long Beach is is at a very good position here to create a manufacturing capital, if you will, in Southern California, especially when it comes to this this this manufacturing area. So I'm going to support the motion on the floor. But I like I said, I would like to see that that not be as restrictive in terms of a 24 month pilot program. But to be more open on that open ended, if you will, maybe come back after a three or four year, five year evaluation to see where we're at with that. I especially think that in in like in any other manufacturing industry, we need to be competitive. I mean, if if our taxes are too high because we tax it at every level of production, it's ineffective, we're going to lose. And I think that we have to reconsider the the options that we have here in terms of taxing every step of the process. So we look at one process, one tax and get it and get it done. Also, looking at the in terms of of of that and also looking at the at the access to capital, you know, we have to be a little bit more flexible on that. I, I don't recall which of my colleagues stated this, but, you know, we know that that the federal regulations are going to be coming. We know that it's it's going to be delays. In fact, if truth be told, we're looking at other options of other natural world plants that are going to be available, though. Yeah. Mushrooms. Yeah. And mushrooms are the under consideration nowadays. So I mean, that's that's on the edge of coming in here. And we're probably going to be hearing about mushroom cultivation and distribution and manufacturing. Maybe not now, but but that's that's coming. Okay. Let me back let me backtrack it a little bit anyway. At the end at the end of the day, at the end of the day, I think that we in Long Beach need to consider ourselves to be competitive. We're a large city as we as we know. And we have some great staff and we have and we have people who here who can do can do the work. And and like I say, we're in a cutting edge. So let's. Hey there. And then let's let's move on. And hopefully staff can come back with a recommendation that will really be able to be put to use. Thank you. Thank you. Councilmember. Councilwoman Mango. Yes. I have two additional small things. One is a jay. On page five. You have almost the same number of businesses in building round review and under construction 130. That is more than 50% of the businesses that are in the process at all. Do we have a timeline that we can get some of these guys online? Like what is. I mean, a lot of these people are already interested. They've already made the investment. It's the process that's holding them back and or construction. Do we have anything besides options one and three we can do to speed it along? Or do you have a timeline of how many will be online in 30 days? 90 days? 120 days? Yeah, it's hard for us to say because the timeline, once businesses start construction, is primarily up to that business. The timeline that they're construction team is on. We do have inspections, but generally once they reach construction, the holdup is the project itself. We have averages for those businesses that are licensed that have been able to get through the process, and we use those averages for our tax projection purposes. But offhand, I don't have those. Would you be able to work with development services to give us a a update on the 77 Building Plan Review? Like, have they been sitting on desks for weeks or are they back with the contractor so we could at least know that from them? Sure. We can provide more of a breakdown for businesses that you said. They're in the construction phase or in. The building plan review. That's on our side. In the city side. Sure. Perfect. Thank you. I have one last statement, which is I see the greatest ability to increase the gross receipts of the marijuana industry in enforcement. Until we crack down on the illegal marijuana sales in our city, it isn't going to. I mean, these things are all minor compared to that. A large percentage of the sales are still in the illicit market. And so one of the things I would ask Council Member Richardson to consider, if we do go to a consultant, which sounds like 30 days to get a consultant, all that stuff, the difference between 1% and just doing the cost out across the whole percentage. The one thing I've heard from I've talked with Elliott, Johnnie Adam consistently. They'd be willing to put money into a pot for enforcement. I don't know what we can do. We've talked about some options. We've offered to sit down between some of the industry, individuals and PD to talk about what options are available. But if there was a discussion of, Oh, we would like to settle on X percent tax, but we'd be open to 1% more if that $178,000 was put into enforcement of getting these illicit individuals out of the market. I know there was a a write up of a potential program that kind of came through the industry. But we need to be more serious about enforcement and we're closer together. So I hope that the industry will take us up on the offers we've made to meet with PD on potential options to help all of you, because the greatest path to increasing your gross receipts is enforcement. Thank you. Thank you, Councilwoman. Councilman Price. Thank you. That's kind of the topic that I wanted to talk about. I'm really grateful up until this point that we haven't had as much of a problem with the brick and mortar illegal dispensaries as our neighbors in L.A. have had. I think that's a lot of that is a testament to how seriously we've taken this issue as a council, how much of a priority we've made the enforcement issue, and really honestly, how often we talk about it being a priority for the neighborhoods. But the delivery concept is is completely out of control. And I don't know. I mean, I'm really looking A.J., I know you've worked really hard on this and on all these issues and you've been really plugged in to what other cities are doing. I think we've taken some really good, proactive measures as a city to increase our enforcement, our fines and fees for commercial property owners and things that we have passed as a council. That has been great. But the delivery market is completely something that we don't have control over right now. We need to figure out what to do in that regards because, you know, I'll tell you, I'm sick of the advertisements all over the city for the four places that. Deliver from businesses that are not licensed in the city. There's no testing in place. There's no consumer protections in place. And we're basically, you know, not we're allowing these people to advertise here. And we have zero consumer protections in place. And we and and we're not even able to tax these entities so that we can put that money back into to enforcement. You know, maybe it's what I do for a living every day that makes me think there's an opportunity for enforcement here, that we are not capitalizing, we're not being aggressive about it. We're not and I don't know, that's not a criticism because I think everyone's similarly situated. It's more of a we need to figure out some out-of-the-box ideas. You know, it's kind of like not exactly the same thing. But when we talked about short term rentals, one of the concepts we had is we've got this entity that's an intermediary between the homeowner and the renter, and that entity is trying to distance itself from regulations, doesn't want to be involved in the regulatory aspects of the industry. Well, that's kind of the same thing that we've seen with a lot of the advertisers for marijuana. They don't want to be involved in figuring out who's licensed and who's not before they advertise them. So maybe we can go to the table with some of the biggest online delivery companies and we we ask them if they can refrain from. I don't I don't know, maybe they can refrain from advertising from businesses that aren't located in the city. What that looks like, I don't know. This is not an area where I have subject matter expertize. But I do know that if you're violating the law and you're not allowing for some of the consumer protections that we are all entitled to as residents in the state, you should be held accountable. And if you're bypassing the testing requirements and you're bypassing all the different regulatory requirements that are brick and mortar operations, or are operations that are licensed in Long Beach have to follow, then you shouldn't be receiving a benefit. You should be held accountable for trying to bypass those because it's just not fair. And so I'm really hoping that we can figure. Out a. Way to find some out-of-the-box ways to go after the illegal delivery market that we're seeing here. In regards to this particular item, I'm totally in favor of looking at it and studying it. I do have a question probably for our city attorney, though, and perhaps you can just educate me on this because I will tell you I'm glad of the direction this item has taken, because when I initially read it, I was having a really hard time understanding how we could in one vote, vote to increase taxes potentially for our residents, and then in another vote, vote to reduce taxes on an entity that's providing income so that we can support enforcement operations. But so I'm glad that we're the timing of this is such that we're going to be able to evaluate it some more. But the question I have is how does changing our ordinance impact the fact that this has come to the city as a result of a ballot measure? Because I think it's very, very important for residents to understand that we're having the marijuana discussion, that we're talking about marijuana industry and we're talking about sales tax for the marijuana industry because of a voter passed initiative, not because of this council's actions, but because of voter passed initiative. So how does changing the ordinance impact the fact that this came to us as a ballot initiative? Well, it would it impacts what changes you can make to the ordinance, because it's a citizens initiative or the initiative that was passed by the voters cannot be just changed by the body itself. But the study and the taxes that have been approved were approved at rates that offered the opportunity for the council to adjust it up or down. And so you could do that. And that's within the authority of the council as. Long as you stay within that range. Yes, exactly. Otherwise it would have to go back to the voter. One of the other comments made from the Dias about dedicating a certain percentage of the tax if you're changing it would probably not be allowed based upon the voter action because you're creating a special tax by dedicating it to a specific resources as a general tax . And so you could allocate any amount you'd like, but that would have to be done during the budget process. Okay. The other question I had, and I love the concept of a shared manufacturing space, but one of the things I'd love the report to include when it comes back is how we go about enforcement. When we're talking about a shared manufacturing space, how do you apportion negligence? How do you apportion lack of compliance? How do you apportion that when we're talking about a shared manufacturing space, especially when we're sharing? Utilities, other resources, assets of that nature for the manufacturing process. So that's something that I would be really interested in. But, you know, as a as a as the wife of an engineer who has worked in labs for many years and understands the lab industry, it's not it's not cheap to set one of those up. So anything that we can do to help bring quality. Industry to the city and work together to keep out illegal industry that is not complying with what the residents, the community and everyone here who's who's serious about consumer protections work together to keep those businesses out. I'm all in favor of. Thank you. Thank you, Councilwoman. Let me I have a couple a couple of questions, such comments for when this comes back. And let me go first, since I know that the next few speakers have had a bite at the apple already. Just a couple of things. So the first is, obviously, I think I'm supportive of of where this is going and is certainly of getting the information detailed out to the council. I think option one is is very interesting. I think there are a lot of planning, I think adjustments that need to be made to ensure that we just have a just a better system in place. And I think the Planning Commissioner is absolutely the right approach. I am also interested in the shared use manufacturing. I think that's that's certainly something I think Mr. Modica and the team can get back to us hopefully fairly quickly just to get that information. So that can be part of, of, of this process. It doesn't seem like it's something that is too much different than what we're doing, but certainly a way to to create some some synergy within within the industry. And certainly I think if that looking at what our our tax rates are and coming up with the recommendation from staff, I think is a very reasonable request. I do have one question as it relates to that, and I think this is something I've actually talked to some of the BCA members in the past about and it's actually something I want to understand better because I, I remember in our conversations and setting up on the cultivation side. We did this $12 a square foot number. And I know if you look at a bunch of cities, there is a difference. You know, some some cities are using the square footage measurement and others are just using the flat percentage. And so if when this comes back, can you just kind of walk us through why we went that in that direction and how and why this changes is is better or or in your opinion, not better, you know, for for the city of Long Beach, because I know there was some extensive conversations that we all had as to whether this was the right approach. And the truth is and I think it's important for us to note that as the council developed these rates and these percentages, it's not like we had the perfect formula to get this 100% correct. We were building something as we went as best we could, hearing input, ensuring that we would have the resources that we needed to provide, the services that we committed to with the residents. And we wanted to make sure that we found the right balance. And so a lot of these numbers were developed in partnership, I think, with with our partners, but also in a discussion and debate the council had. And so I'd love to hear from staff just a little bit more explanation on the square footage and the percentage when that comes back. I think that would be good for the council to hear. And then the last thing is I'll just reinforce something, something that a couple of councilmembers just added to me. The the, the when I hear, you know, you know, maybe the, the, the taxes aren't coming in maybe as high as we initially projected or, or not the numbers that we'd like to see. I mean, to me, the biggest reason for that has got to be or a huge reason has. Got to be. The illegal transportation that's happening across the city. And I think it's been mentioned now, and I think that the delivery services that are not getting taxed and they're not paying into our system are absolutely causing a major burden to the current operators are now illegal part of our process and so I don't know if there's more that we can do it I can't imagine that that that we're doing all we could be doing in that area. And maybe it's a resource question or a technology question, but I'd love to know and see how we could either invest on our side or figure out a way to capture more of that market and crack down more on the illegal deliveries. And I think that whether that's we do that through the budget process or whether there are maybe some additional new best practices that are happening in other communities, I will say this is not like unique to Long Beach. This is happening in a lot of in a lot of communities. But I hate that. I don't I don't like that our local, ah, local folks that have gone through the process and that are illegal entities we recognize are essentially being put at a competitive disadvantage. And, and the other group is being put at a competitive disadvantage is us because as a city we are losing. Do we have any idea how much how much we're losing in revenue because of the illegal deliveries? It's it's hard to say for sure, but I've read reports that estimate the size of the illicit market to be around 75% of the total market statewide. Whether that applies to the city of Long Beach as well, I'm not really sure. Well, I think I you know, I'd like to to do a little bit more if it's possible. I'm not sure if it's available data, but I'd love to understand how much we are missing out on it from a revenue perspective for the city because of the illegal because of the illegal delivery system we have. And if we are losing out on as much as I you know, I assume we are just by looking at what's out there from an illegal delivery perspective, that is an immediate place where we should be. We really want to focus on our public safety services and our health components and all these are the things that we want to do and ensuring that our current operators are successful. We I think we got to kind of figure that out. I'd love to see a number or a guesstimate on what we're losing. Can we get that? You think? We've we're working on analyzing the illegal market and we can prepare studies. Yeah, but I want. I want how much we're losing in tax revenue every year. Oh I see. Sure we can include that in the in the report. And may I think would be helpful to also show kind of the history of how we became to this decision. We spent a lot of time as we were developing the ordinance, talking about what our enforcement mechanism was going to be, what kind of staffing resources we were going to need. Try not to make this a police activity, but more of an administrative activity in keeping with state law. So we'd like to provide you a lot of that background to and just understand where we are today. And of course, we'll look at other cities if they found a way to do it within that model. We'd love to know that as well. Great. Thank you very much. And Councilmember Richardson. Thank you, Mr. Mayor. Just. Just the talk. Just come back to a couple of things. So, one on timing. I know the mayor asked about option two. An option three. I want to go to option one. So. So, AJ. Mr. Jackson. So this planning commission. Look, how long do we think have you already engaged? Planning. Planning department? How long do you think it takes to do that process? We have and Planning Bureau believes that they should be able to complete the study by the fall. So as soon as three months that that would be the estimated timeline for that. So about three months. Okay. So three months on some of the planning stuff. How does that align with what we think is phase three in Los Angeles? Phase three, I believe, has opened or is scheduled to open soon, but within phase three, they actually have more phases within it. So the complete rollout of phase three, I'm not sure, but possibly by the end of this year. Okay. And then so option two, in terms of the consultant. So so I would imagine the job piece that we added in that something, you know, I don't think we need to do like a, you know, like a Buxton report or some elaborate economic analysis. I'm thinking we talk to Pacific Gateway, our internal folks. Figure out what the formula is on jobs and sort of forecast that out. So like an internal calculation, that's something we can do on the job. He's right. Yeah. We can take averages for existing businesses and apply those tests. That's, that's what I'm thinking. And then in terms of, you know, comparing what the fiscal impact is on 1% to 3% range, the fiscal impact we're talking about, that's not something that we can conduct in financial management because we see that all the time in the budget process. So we have prepared an estimate for for every 1% change in the tax rate, what the impact would be to the general fund. What I'm hearing is that city council wants us to dove more into the details and study those numbers further. So for that, I think we would need a consultant to help us prepare that analysis. And how long that would take? I'm not sure at this time. Well, so what? Like what? And and I understand people have asked about option three. I don't have a question on that. So what I'd like to do is understand. So when I think fiscal impact, I think, you know, let's compare what our our initial forecast was short. Right. We we looked at what we anticipate to open based on a certain amount of businesses opening. The forecast we're looking at is, you know, sort of looking at 1%, 2%, 3%. And assuming that we get a higher, the idea is we get a higher sort of open rate. Or sort. Of clearance rate of these businesses, and the idea is to try to offset it. So are you saying like to do that kind of analysis, you may need to bring in a consultant to do. Yes, I'll go ahead and take that. So what we have what the council. Has before them right now is a fiscal impact analysis that's been done by staff in order to do to go deeper, to do analysis. On the jobs impact and some of the other questions. That were raised in terms of the fiscal and economic analysis, we it's likely going to require some professional services to do that. We certainly can, you know, work with our economic development department to see how we might be able to economize on that or partner on that and get support on that. But based upon what's being requested, it looks like we're going to need to get some professional services to help us with that. So what what I would love to do is get an update sooner on what that timeline looks like, the fleshed out timeline. So like within the next 30 days, come back and just say, hey, after, you know, talking to planning, after doing our initial review on option three and looking at our resources internally, this is what the window could look like to bring this back. Because my my expectations, I and I want to put that in comparison to like if the idea is to be competitive and to try to boost, you know, sort of be competitive, to boost the tax base, then I want to understand that in comparison to sort of the timeline on phase three in Los Angeles. So if what we're saying is Los Angeles phase three begins in in fall and we'll fully optimize and people are making big business decisions within the three months of fall, by the end of the year, then that tells me you've got, you know, your 90 days to do your initial review and then implement over another 90 days or whatever it is to make sure that we're competitive. So so what I don't want is to put restrictions on you here at council that somehow trip up the intent, which is to try to be competitive. So that so the hope is we can do as much as we can in house, not spend the money on consultants if we don't have to and see if we we can sort of achieve that. That's that's the hope here. And then the other thing here. The other thing I'll say is so, so, so yeah, a two from four early that says, hey, this is what the timeline could look like and this is what we heard. I think I'd like to see that in the secondly on the conversation on on enforcement, I completely I completely agree on the conversation on sort of the legal delivery stuff. And and I would grapple with I, I understand that this is something that people have unanimous generally unanimous support for sort of tamp down on that market. But I also understand I understand that also understand that when we say new industry, I put quotes because it's not a new industry at all. It's it's it's not a new industry. This product is existed in the community. This is the process of bringing it into the into the sunshine. I think while, while we do a lot of enforcement and we should still think of the innovative ways to do that, I think we should focus our time will figuring out how to capture as much as possible of the legal industry. And if they have if they're overburdened with regulations and taxes and all those things, it doesn't help us. It doesn't help them to compete with the illegal market. And so we just have to keep that in mind as we connect that to the timeline. If we're overburdened, we're overburdened and we have a long time on this process. All it does is just support the legal market and support the legal delivery market as well. So so those are those are my thoughts, my comments. So is that okay? Can we do that? Is it okay to get back with the two from for within 30 days on simply the timeline? Yes, because I know there's been a lot of questions by counsel. I know you need a minute to kind of think all this out. Yes, absolutely. We can do that. Great. Thanks a lot. Thank you, Councilman Mongo. So I think what I heard of Jason is that page 14, 178,500 number is the loss to the general fund per percent. So 178 times 3% would be 534 over a 24 month period. 36 month period. You go 1 million, you go 1.5 million and so on. I think that I'm in complete agreement that we don't need an outside consultant, if possible. I don't want to spend $60,000 to save $178,000. What I'm really looking for is a staff member to reach out to the industrial real estate community, pull a report of vacancies in the city. They say everything on it. They say cost per square foot. They say all these things. It's a quick survey of the vacancy, our vacancy rates 2% or something that I think that they presented that I see not that easy enough. Give a call through. Real quick, are you open to taking in marijuana facilities? If so, find out which one of these they fall in and how much revenue we think they could bring in. Make them growth estimates. Here's the high. Here's the low. That's what I'm looking at. Hope that brings some help to what my series of questions was, because I don't I just don't think it's that complicated. Sure. Thank you. There's a there's a motion and a second on the on the floor. It's a motion by Councilman Richardson as presented. And so with that members, please go ahead real quick. Bickerstaff, just respond to Stacey's comments about the council, about their consultant. Mine is just an opinion. It's still their decision. I think at the end of the day, I think it's I think they're suggesting to staff that that the government members suggestion of staff that if you can do it in-house, preferably preferably to do it in-house is the suggestion. And so there's a motion and a second. The motion as made by Councilor Richardson. Please cast your votes. Motion carries. Okay. Thank you. Motion carries. We're now moving on to the rest of the agenda. So thank you all for being here for the other item. Item 20.