(Image Credit: IMAGN) Lower-tier shelf flower is seen at Mango Cannabis, a dispensary store at 1051 McNutt Road, Sunland Park, New Mexico, on Wednesday, Jan. 29, 2025.
Los Angeles, California – In Los Angeles, the cannabis industry was supposed to be a beacon of justice—a pathway to economic opportunity for those long targeted by the War on Drugs. But for many business owners, especially those licensed through the city’s Social Equity Program, it has become a cautionary tale of bureaucracy, debt, and disillusionment.
Though Angelenos consume millions of pounds of cannabis each year, legal dispensaries say they are hanging on by a thread. High taxes, costly fees, and lax enforcement of unlicensed shops have left licensed retailers scrambling to survive. While the city once touted its Social Equity Program as a progressive model, aimed at uplifting Black and Brown entrepreneurs disproportionately impacted by past marijuana laws, the result has been far from equitable.
Some owners have already shuttered their businesses. Others are days or weeks from doing the same. Tensions have spilled into public meetings, with confetti-throwing protests and chaotic confrontations. At the core of their frustration is a simple truth: the promises of support, resources, and fairness haven’t materialized.
Participants in the equity program were told they would receive grants, legal assistance, and technical help to start and run their businesses. But many describe a process riddled with red tape and little meaningful support. The city has distributed around $13 million in grants to equity applicants—an average of $48,000 per recipient—but business owners say that’s not enough to navigate a system that demands tens of thousands in fees and compliance costs just to stay open.
To make matters worse, cannabis in L.A. is taxed at nearly 40%, including city, state, and excise taxes—among the highest rates in the country. That drives customers to the flourishing illicit market, where untaxed, unregulated cannabis is readily available at half the price. Even some of L.A.’s neighboring cities offer far lower tax rates, compounding the challenge for legal retailers within city limits.
Efforts to fix the system have been halting at best. A motion by Councilmember Imelda Padilla to examine lowering taxes is still crawling through committees. Meanwhile, business owners are closing their doors, or withholding taxes in protest. Enforcement efforts have proven uneven. Illegal shops often face little lasting consequence, while some legal operators report being raided or harassed by law enforcement.
The Department of Cannabis Regulation, which oversees the Social Equity Program, is itself under scrutiny. Unlike most city departments, it’s funded directly by fees on cannabis businesses. That funding structure has raised concerns that the department is incentivized to charge higher fees—then use state grant money to “waive” them, effectively recycling aid funds back into its own budget. State auditors recently called for the return of $1.8 million in misused equity funds, part of a broader review of how the department has managed nearly $44 million in state grants.
Business owners say they’re still waiting for accountability. Several scheduled commission meetings to address taxation concerns have been mysteriously canceled or stripped of key agenda items. Public comment has become the only outlet, and even that has turned into spectacle, underscoring just how far the system has drifted from its original ideals.
Legal cannabis was supposed to be a new beginning. In Los Angeles, it’s become a broken promise.
