‘Disastrous’ fee hikes for Los Angeles marijuana businesses approved

Los Angeles cannabis businesses are now on the hook for “tens or hundreds of thousands of dollars” in extra annual fees.

That’s after the City Council approved across-the-board hikes for inspections, license renewals, and other requirements on Tuesday.

As the Los Angeles Times reported, city officials said the fees are necessary to cover declining marijuana tax revenue.

But harried cannabis businesses say the added costs, coming amid slumping sales, will be “disastrous.”

“There’s nowhere to pull the money from,” Luis Rivera, who operates a delivery service in Sun Valley, told the Times.

“The fees will be disastrous.”

According to an analysis from Manzuri Law, an L.A.-based firm that specializes in cannabis business, the city Department of Cannabis Regulation last year imposed “new and very expensive compliance requirements” upon marijuana businesses in California’s largest city.

These “requirements will cost licensees tens or hundreds of thousands of dollars in additional annual fees to comply with,” according to the firm.

And under the new law the City Council approved on Tuesday, many of those fees have gone up even further.

The new fees are projected to generate $6 million in annual revenue for the DCR, officials said.

DCR has an $8.6 million budget for this fiscal year and is mandated to recoup its expenses through fees and other charges.

But critics say many of the fees are duplicative, and cover services or inspections that state regulators already perform.

The fees are necessary because local cannabis tax revenue has declined from more than $100 million to $90 million in 2024, according to DCR.

On top of state sales and excise taxes, Los Angeles imposes an additional local gross receipts tax on marijuana businesses.

Rates range from 10% for retailers and delivery services to 1% for testing labs and distributors.

“This is a difficult but necessary action for the continued functions of (the cannabis department) and to avoid further strain on our General Fund,” City Councilmember Imelda Padilla said in a statement.

Bryan Bergman, an attorney who works with the cannabis businesses, said “(t)he fees are coming at a really bad time for industry folks.”

“And it’s a very significant increase,” he told The Times.