Council hears DCR study recommending higher cannabis surcharges amid possible $10.5 million grant repayment

Los Angeles City Council received a presentation from the Department of Cannabis Regulation (DCR) on a 2024 comprehensive surcharge study recommending increases to commercial cannabis application, licensing, inspection and regulatory service surcharges to reach full cost recovery.

DCR officials told the council the recommended increases would generate about $7.8 million for the general fund and that the department’s cash balance is projected to be roughly $3 million at the end of the fiscal year if current policies remain unchanged. Councilmembers and vendors questioned whether the city can rely on state grant money after DCR said a state audit found the city’s grant coordinator did not follow agreed terms and the state may require returning approximately $10.5 million in local grant funds.

The study, DCR staff said, compares current charges on the books (last adopted in 2020) with the departments’ actual costs to provide licensing and regulatory services in the later period. Jason Clean, assistant executive director for the Department of Cannabis Regulation, summarized that DCR has not increased surcharges since 2020, that DCR added positions during the transition to…