In response to concerns from Harbor Area residents about the proliferation of smoke shops around sensitive areas such as schools, parks and daycare centers, Los Angeles City Councilmember Tim McOsker introduced a motion on Tuesday, Aug. 12, to temporarily halt the spread of such businesses throughout his 15th Council District.
If approved, the motion would direct the Department of City Planning, with assistance from the City Attorney’s Office, to prepare and process what is known as an Interim Control Ordinance. It would prohibit establishing or expanding smoke shops for 45 days anywhere in the district, which includes San Pedro, Wilmington, Harbor Gateway, Harbor City and Watts.
The motion calls for a report on best practices from other cities such as Redondo Beach, Long Beach, San Francisco and New York City on how they cover zoning, licensing, buffer zones, youth-access controls and permitting for tobacco and smoke-shop businesses.
The temporary moratorium could be extended, according to McOsker’s office.
“I applaud the Wilmington residents, educators and activists who are leading the way in protecting our neighborhoods,” McOsker said in a statement. “For too long, smoke shops have been allowed to pop up, often right across from our schools, parks and daycare centers, exposing our kids to products they should never be around.”
McOsker held a news conference before Tuesday’s council meeting alongside Wilmington residents near Phineas Banning High School.
“Wilmington is a small town with a big heart that takes care of its own,” Alicia Baltazar of the Alliance of Californians for Community Empowerment said in a statement. “Our community leaders have worked tirelessly to improve the quality of life for its residents and these smoke shops undermine that work by compromising our student’s safety while traveling to and from school.
“These children are already at a disadvantage by growing up surrounded by refineries,” she added. “The last thing they need is easy access to tobacco and tobacco products.”
Last week, the council approved an ordinance to raise fees for licenses and renewals, among other services, for legal cannabis business owners. Under the ordinance, a license renewal will increase from $8,486 to $12,617, a temporary approval renewal will go from $4,233 to $6,294 and a record renewal will jump from $1,829 to $2,719.
The ordinance also changed the structure for fines with the addition of “low” and “severe” violations. In total, there are five tiers: A low violation will result in a fine of $3,000, a minor violation will result in a $6,000 fine, a moderate violation will lead to a $11,000 fine, a major violation will result in a $23,000 fine and for a severe violation business owners will see a fine of $34,000.
Previously, a minor violation resulted in a fine of $7,004, followed by a fine of $21,013 for a moderate violation and a fine of $42,026 for a major violation.
Elected officials adjusted the fee and fine schedule as a means to address budget concerns. The fee and fine schedule was last updated five years ago.
According to Jason Killeen, assistant executive director of the Department of Cannabis Regulation, business owners who are part of the department’s Social Equity Program can receive some relief.
In 2018 and 2019, California provided funds to local jurisdictions to develop and operate cannabis equity programs to support individuals disproportionately impacted by the decades-long federal war on drugs. Through a state grant, the department can cover about $3.1 million in renewal fees and new licenses for participants in the program.
From 2020 to 2023, the city collected more than $100 million in gross receipt taxes from the cannabis industry. In 2024, that figure declined to $90.5 million, according to data from the Department of Cannabis Regulation.
Marijuana business owners say high fees and burdensome taxes from the state and local jurisdictions, and other regulations, make it difficult to succeed in the city.
Tak Sato, the president of STIIIZY, the largest cannabis company in California, previously urged elected officials to allow up to three cannabis retail stores within 700 feet of an additional existing store. He argued that the city’s buffer zone rule does not exist in 95% of other jurisdictions.
Sato described the rule as “completely unusual.”
“Not only is it making it impossible for applicants to find compliant properties, it’s allowing landlords to use the scarcity to hike up prices up to three to six times market value,” Sato said. “In addition to the illegal dispensaries, I believe … the high market rent that the landlords are charging existing operators is the main issue causing so many cannabis operators to fail.”
Councilmember Imelda Padilla, chair of the council’s Government Operations Committee, introduced a proposal in July to examine potential tax relief options for cannabis business owners, who must adhere to the city’s 9.75% sales tax in addition to another 10% in business tax, as well as a 19% state cannabis excise tax.
Jerred Kiloh, president of the United Cannabis Business Association and owner of The Higher Path Dispensary and The Other Path CBD store in Los Angeles, previously emphasized that these issues are not only the city’s problem but exist countywide.
“I love to see that people think that the cumulative tax is 39%, but the customer also is the one who is going with their dollars,” Kiloh said. “They’re going to other places. They’re going to new illegal shops because the price is just 50% cheaper.
“There’s no incentive to be a legal cannabis operator in the city of Los Angeles any longer.”