4-A
TO: Honorable Mayor and Members of the City Council
ATTENTION: Ryan Smoot, City Manager
FROM: Wangsu Lee, Assistant to the City Manager
SUBJECT: Consideration and possible action to conduct a study session regarding cannabis-related businesses.
DATE: November 14, 2025
EXECUTIVE SUMMARY
Following the passage of State Proposition 64 (2016), the City of Bellflower (“City”) established its cannabis policies and procedures in 2017 to authorize a limited number of cannabis businesses to operate under City regulations. While the City has implemented a few minor adjustments to the policies and procedures since 2017, there has been no comprehensive evaluation of the cannabis policies and procedures to ensure the ongoing alignment with current industry trends in response to the statewide economic, regulatory and market challenges. This study session is intended to serve as the initial phase of a comprehensive evaluation in order to provide the City Council with an overview of the current cannabis industry and discuss the City’s existing policies and procedures including local tax rates, fees, and permitting requirements.
RECOMMENDATION TO CITY COUNCIL
1) Receive the cannabis study session presentation and after consideration, provide direction to the City Manager regarding cannabis businesses in the City of Bellflower; or
2) Alternatively, discuss and take other action related to this item.
FISCAL IMPACT
None at the time of this study session.
DISCUSSION
The cannabis industry continues to evolve. In California, licensed cannabis business operators are facing mounting competition from the illicit cannabis businesses that undercut prices and erode market share. As a result, many legal operators are reporting reduced profit margins due to ongoing price suppression by the illicit market and high costs associated with regulatory compliance (i.e., taxes and fees). In response to these challenges, and in response to general market conditions, the cannabis industry is experiencing increased consolidation through mergers and acquisitions, as larger firms seek to achieve economies of scale and stabilize operations.
BELL F O «‘1 X
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Staff Report – Cannabis Study Session
November 14, 2025
DISCUSSION – Continued
At the same time, major corporations from the traditional sectors including alcohol and tobacco companies (e.g., Constellation Brands and Phillip Morris International, as examples) are entering the cannabis market in anticipation of federal legalization – intensifying the competition within the cannabis industry.
Federal banking restrictions continue to constrain the industry’s growth, as cannabis remains classified as a schedule I controlled substance (e.g., heroin, LSD), preventing many cannabis businesses from accessing traditional banking services or securing loans. Additionally, both federal and state agencies, including the U.S. Drug Enforcement Administration (“DEA”) and California’s Department of Cannabis Control (“DCC”), are preparing for regulatory changes that could significantly impact local cannabis operations.
Most impactful to Bellflower’s cannabis programs and policies are adjustments made by other local and State agencies since Bellflower’s programs were initiated. Other jurisdictions in California are actively adjusting to the changes in the cannabis industry by closely reviewing their tax rates and fees and initiating internal policy discussions and have already implemented reductions to cannabis taxes and fees to help sustain local cannabis businesses and preserve their own cannabis tax revenues. Within this broader context, the City’s existing cannabis tax rates, permit fees, and related policies and procedures should be regularly reviewed to ensure a competitive market for local cannabis operators and to provide clear, well-defined application processes for both staff and applicants.
Bellflower has not conducted a comprehensive overview of its cannabis policies and procedures since 2017, and this study session is intended to serve as the initial phase of a potentially broader evaluation of the cannabis businesses in the City while also providing general input to City staff as we craft policies for the future consideration. The City Manager’s office has compiled data from other jurisdictions regarding tax rates, fees, and other cannabis policies and procedures, including those of the State, and will present these findings as a part of this study session as a basis for the City Council’s discussion. Based on the review of industry trends and local conditions, as well as the City’s existing codes and procedures, there will be several recommendations for the City Council’s discussion. Any formal consideration of recommended actions will be brought back to the Council for future consideration.