Brandon Brinson poses for a photo in late July next to cleared shelves at his shuttered L.A. cannabis dispensary. Brinson started the business with his wife, Evelyn, as part of the city's Social Equity Program.
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Jordan Rynning
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LAist
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Topline:
Cannabis business owners told LAist they struggle to pay high taxes and fees while illegal operations go unchecked. They say when they’ve tried to talk to city officials, they’ve been stonewalled and shut out.
Who is most affected: The city’s Social Equity Program was supposed to provide a boost to Black and Brown communities disproportionately targeted by heavy handed cannabis policing. Instead of a leg up, business owners in the program told LAist it has led to a cycle of stress, debts and broken promises.
What we're following: Business owners have had confrontations with public officials and the city department in charge of cannabis licensing may have to return up to $10 million to the state for failing to follow grant agreements.
There’s no question people in L.A. County consume a lot of pot — nearly a million pounds of cannabis each year according to official reports. While the demand is clearly there, legal cannabis businesses in the city of Los Angeles say they are struggling just to stay open.
Cannabis business owners told LAist they struggle to pay high taxes and fees while they watch illegal operations go unchecked. They say when they’ve tried to talk to city officials, they’ve been stonewalled and shut out.
Some licensed cannabis business owners have had to close. Others say they are months — if not weeks — from having to shut their doors, leading to lawsuits and a rowdy, confetti-filled confrontation at a public meeting.
Many of these business owners are part of L.A.’s Social Equity Program, which was supposed to provide a boost to Black and Brown communities disproportionately targeted by previous criminalization of pot. Instead of a leg up, the business owners told LAist the program has led to a cycle of stress, debts and broken promises.
They’re not the only ones with debts to pay.
One state audit found that grant funds meant to help cannabis businesses may not have been spent as intended. The L.A. Department of Cannabis Regulation (DCR) estimated the city may need to return up to $10 million they received from that grant to the state.
An audit of another grant found that $1.8 million meant to go directly to social equity businesses was also not used according to grant agreements, according to email correspondence LAist acquired through a public records request.
In emailed responses to LAist questions, Jennifer Marroquin, a spokesperson for DCR, said a resolution was made with the state on the $1.8 million figure and that the department has returned nearly $48,000 in grant money that was not spent during the grant term. Marroquin said the state recently granted another $3.5 million to support L.A.’s Social Equity Program.
Marroquin said the program provides “free and low cost legal assistance” to applicants and business owners. The department is a permitting agency, Marroquin said, and “does not get involved in private business disputes, business decisions, collect taxes or engage law enforcement for unremitted taxes.” LAist has reached out to Mayor Karen Bass, who did not respond prior to publication.
This isn't just bad policy, it's a betrayal of the equity promise.
— Whitney Beatty, legal cannabis business owner
Whitney Beatty told LAist that she was promised grants, technical assistance and legal services through the Social Equity Program to help run her dispensary, Josephine & Billie’s in Exposition Park. She’s one of about 240 current cannabis business owners licensed through the program — among about 700 total legal shops in the city.
“ I'm spending tens of thousands of dollars just to stay licensed and compliant, in a system that charges my customers over 40% in taxes while they can walk across the street to an unlicensed shop and buy untaxed, untested product for half the price,” Beatty said at a Cannabis Regulation Commission meeting on July 2.
“This isn't just bad policy, it's a betrayal of the equity promise.”
The high price of cannabis business
Los Angeles created the Social Equity Program in 2019 “to promote equitable ownership and employment opportunities in the cannabis industry, with the purpose of decreasing disparities in life outcomes for marginalized communities directly impacted by the War on Drugs,” according to the city’s website.
Since then, the program has provided about $13 million in grants directly to business owners, according to an LAist analysis of DCR data. In all, the 271 applicants who got grant funding received an average of around $48,000.
Even some business owners who received the maximum total grant amount — about $93,000 — told LAist that the money didn’t go far to cover taxes, fees and other costs they say were imposed on them by DCR.
Business owners have to pay a variety of fees, costing tens of thousands a year.
Taxes on cannabis products in the city of L.A. are significantly higher than those on other products.
In addition to the standard 9.75% city sales tax, cannabis businesses pay another 10% in business tax, and a state cannabis excise tax of 19%. That brings the total tax rate on legal cannabis in L.A. to a staggering 39.75%, according to an L.A. City Council motion presented by Councilmember Imelda Padilla in July.
Padilla’s motion called for an analysis of the potential effects of lowering the city’s cannabis tax in an effort to make L.A.’s shops more competitive — both with unlicensed shops and with neighboring cities that have lower base tax rates like Long Beach (8%) and Pasadena (4%).
Many L.A. business owners like Brandon Brinson say they simply can’t afford to pay all of their taxes in the current market. While Padilla’s motion is still making its way through committees at the City Hall, he and others say they’re running out of time.
Brinson and his wife, Evelyn, opened their business in 2022. Just three years later, Brinson is closing up The Green Paradise shop in Mid-Wilshire. He said the high taxes, fees and rent are to blame.
Brinson spoke with LAist at his cannabis dispensary storefront on July 25, the day before he had to turn over his keys to his landlord. His shop’s shelves were bare.
Brinson said his experience with the social equity program has been frustrating from the start and has “ led to nothing but complete debt and devastation.”
He first applied for the social equity program in 2019, and it took a lawsuit for him to be able to apply for a license.
The lawsuit, filed by social equity applicants against the city in 2020, claimed that some were given an unfair advantage by being allowed to access the application portal before it officially opened. Every second was crucial, they said, in a race that only gave the first 100 applicants an opportunity to open a licensed business. As a result of the lawsuit, the city issued additional licenses to entrepreneurs including Brinson.
“ They just painted this grand opportunity to rebuild the Black community . . . to help rebuild or restore the harm done from the War on Drugs,” he said. “ So we jumped in. It was a no-brainer at that time.”
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Three years after opening, he said social equity applicants like himself received “crumbs” compared to what they were promised in support from the city.
Instead, Brinson said he found himself paying high taxes, fees and rent that pushed him out of business.
To make matters worse, he said he had to compete with an unlicensed shop right next door.
LAist has confirmed that the shop next door is not licensed with the city and sells cannabis.
LAPD Captain Ahmad Zarekani, who heads the department’s Gang and Narcotics Division, told city officials at a committee meeting in February that enforcing cannabis laws is “not the priority” for his department after legalization.
Zarekani said that proactively policing illegal cannabis businesses takes resources away from other priorities. Even when his division makes arrests and shuts down a business, Zarekani said there are rarely consequences for those cases.
“The people basically just move, move to another location, open the business, and they're back making money,” Zarekani told members of the Government Operations Committee, adding that he believes licensed businesses are “victimized” by illegal cannabis shops.
Brinson said that even though he is licensed and the shop next door is not, he is the one who has to deal with law enforcement.
“ The police have come and raided me,” Brinson recounted to LAist before sharing videos of California Highway Patrol officers pulling up to his store and moving his employees away from the cash register.
Kika Keith, owner of the dispensary Gorilla RX in South L.A., said she has had similar experiences with law enforcement.
She told LAist in May that officers had come to her store four times in eight months to collect taxes for the state.
“They come with 20 officers,” Keith said. “They disarmed the security guard. I mean, you would think that there was an armed killer inside of my store with the level of force and presence that they show, yet they don't go right down the street and shut down those [illicit] stores.”
Kika Keith poses for a photo at her dispensary, Gorilla RX, in South L.A. on May 1, 2025.
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Jordan Rynning
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LAist
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Brinson and Keith both emphasized that as licensed businesses, they sell tested and regulated products. They say there is no way to know what is in the products at the unlicensed shops.
Other licensed cannabis distributors have decided they will no longer pay the city’s taxes.
“Until we get services, Catalyst Cannabis Co. and a bunch of others . . . are withholding our tax money from the city of L.A.,” Elliot Lewis of Catalyst Cannabis Co. announced at a City Council meeting in April.
Councilmember Padilla, who chairs the city’s Government Operations Committee, said at a June meeting that 700 cannabis businesses had fallen behind on their taxes.
An LAist analysis found there are currently only about 700 cannabis businesses with active licenses. And business owners told LAist their mounting tax bills don’t just go away when they’re forced to close.
Cancelled committee hearings
Kika Keith told LAist that the Cannabis Regulation Commission has for months denied cannabis business owners the opportunity to discuss the effect state and local taxes have had on their businesses.
Thryeris Mason, president of the commission, set aside time ahead of their March meeting for that discussion. Then it was removed from the agenda without explanation.
“At the Feb. 6, 2025, meeting, I did request that taxation be on this agenda,” Mason said at a commission meeting on March 20. “For reasons unknown to me and other members of this commission, that did not happen, so I am going to again request that taxation be placed on a future agenda within the next 30 days.”
Mason added that, as president of the commission, she is responsible for setting the agenda, according to the commission rules and operating procedures.
A discussion of taxation was on the agenda released ahead of a May 15 commission meeting, but was placed last, after eight other items. Business owners told LAist they had been promised a special meeting on the topic, and were concerned there would be too little time to address their concerns.
Keith told LAist that she and other business owners believed control of the commission had been “subverted” by department administrators.
Business owners spoke during the public comments portion of the May meeting. Brinson called the commission a “circus” before showering the podium with confetti.
Brandon Brinson shoots confetti into the air while giving public comments at a Cannabis Regulation Commission meeting on May 15, 2025.
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Jordan Rynning
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LAist
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When it was clear to the business owners that the commission was not going to discuss tax issues, some in the crowd began yelling at the commission members who then called the meeting to a close.
The crowd was guided into an adjacent room.
Soon, more than a dozen officers began pouring out of elevator doors to see a raucous crowd.
Someone in the crowd yelled out, “Hey, bring it in!”
Another called, “Kika, we need you in the group photo!”
One of the cannabis business owners counted down and snapped pictures on a cell phone, before they turned their attention to the police officers.
“I didn’t know you all responded this fast!” A business owner yelled to the officers, “It takes an hour and a half to get to my South L.A. store!”
The next two scheduled meetings were cancelled after the disruption.
Cannabis business owners disrupt the Cannabis Regulation Commission meeting on May 15, 2025, after discussions on tax rates were removed from the agenda.
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Jordan Rynning
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LAist
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“We’re being abused”
The Social Equity Program is managed by the Department of Cannabis Regulation (DCR), a full cost-recovery department that is primarily funded through fees on licensed cannabis businesses. Unlike most other departments, it does not receive money from the city’s general fund. Cannabis business owners like Madison Shockley say they believe this incentivizes the department to charge businesses more in fees, and then waive some of those fees using grant funds from the state, which the department can then keep to pay for department expenses.
“ So they say this fee would've cost $9,000,” Shockley told LAist, “but look, we waived it for you, so we saved you some money. But that was money they were supposed to give to me to spend on what I needed to spend.”
From 2019 through last year, the Department of Cannabis Regulation has received more than $44 million from the state as part of two grants according to agreement records — about $22 million meant to help social equity program applicants and an additional $22 million for the city from transition provisional cannabis licenses to annual licenses.
Business owners aren’t the only ones with questions about where that money went. State officials also say some of those funds were not properly distributed by the city.
The Governor’s Office of Business and Economic Development, or GO-Biz, conducted an audit of the Department of Cannabis Regulation’s grant spending and found issues with how some funds were spent.
In emails obtained by LAist through a public records request, officials for GO-Biz called for $1.8 million of the funds meant for social equity applicants to be returned to the state.
LA’s social equity program director Imani Brown told GO-Biz that, instead of going directly to equity business owners the money in question was used by the city to waive licensing fees of social equity applicants and pay contracted vendors.
The city argued that this use of the funds was approved by the state. William Koch, a deputy director at GO-Biz disagreed, replying that the city department failed to show that the funds were used in line with grant agreements.
What's next
Jason Killeen, an assistant executive director in the department who spoke at a City Council budget hearing on May 2, said the state could make L.A. return up to $10 million of the funds provided from the two grants.
Shockley told LAist that he thinks the department is charging business owners like him more than city policy requires.
He filed a lawsuit against the city last month, claiming DCR is requiring him to pay more than $15,000 in fees for an annual licensing process he says he never applied for.
Shockley said that paying the additional fees, about half of which were set to be due on July 31, would put him out of business. On the other hand, he said, not paying the fees after DCR started the process on his behalf would mean he would become ineligible for a license in 2026, also putting him out of business.
Unable to find a lawyer in time for the hearing, Shockley represented himself in a hearing before Judge Theresa M. Traber on July 25.
Shockley called the hearing a “Hail Mary effort” to keep his business alive.
When Judge Traber considered issuing a temporary restraining order on the city, deputy city attorney Patrick Hagan said the city would agree to put a hold on Shockley’s fees until further hearings could be held.
Shockley said this victory in court saved his business, but that similar situations have forced other business owners to close their doors.
While cannabis businesses struggle, the Department of Cannabis Regulation has been growing.
We're being abused by the leadership of this department . . . and you guys aren't doing a thing about it.
— Madison Shockley, on what has told DCR leaders
A report presented to the City Council in April on proposed fee increases found that the department’s staff had grown 73 percent and salary rates had increased 18 percent since fiscal year 2021, when the fees were last updated.
The report recommended that fees be increased to cover the additional costs, but Shockley says business owners haven’t received any noticeable increase in services from the larger department staff.
”We've been at every commission meeting, every council meeting,” Shockley told LAist, adding that he has met with the Mayor Karen Bass four times in the past month.
“At the last [Cannabis regulation] Commission meeting, I told the commissioners that we are being retaliated against,” he said, “we're being abused by the leadership of this department . . . and you guys aren't doing a thing about it.”
Caption for lead image: Brandon Brinson poses for a photo in late July next to cleared shelves at his shuttered L.A. cannabis dispensary. Brinson started the business with his wife, Evelyn, as part of the city's Social Equity Program.
