I don't know of any challenges to the law, but it is likely unconstitutional.
The Free Exercise Clause of the First Amendment generally prohibits burdens on the exercise of religious beliefs unless they are merely incidental to the effects of a “neutral, generally applicable law.” Employment Div. v. Smith, 494 U.S. 872, (1990). If the challenged law is not neutral and generally applicable, it is subject to strict scrutiny.
The Los Angeles fireworks ban can be found at Chapter 56 of the Los Angeles Fire Code:
The possession, manufacture, storage, sale, handling and use of fireworks are prohibited.
Exceptions:
- Storage and handling of fireworks as allowed in Section 5604.
- Manufacture, assembly and testing of fireworks as allowed in Section 5605 and Health and Safety Code Division 11.
- The use of fireworks for fireworks displays pyrotechnics before a proximate audience and pyrotechnic special effects in motion pictures, television, theatrical or group entertainment productions as allowed in Title 19, Division 1, Chapter 6 Fireworks reprinted in Section 5608 and Health and Safety Code Division 11.
- The possession, storage, sale, handling and use of specific types of Division 1.4G fireworks where allowed by applicable laws, ordinances and regulations, provided that such fireworks and facilities comply with NFPA 1124, CPSC 16 CFR Parts 1500 and 1507, and DOTn 49 CFR Parts 100–185, as applicable for consumer fireworks and Health and Safety Code Division 11.
There is a separate exception for religious organizations, but not for private religious observances. I don't know enough about Taoism or any other religion to say that banning the use of fireworks in such a setting is a burden on religious beliefs, but assuming it is, the Los Angeles ordinance is likely unconstitutional.
Free Exercise Clause analysis often breaks down -- as in the other answer to this question -- by merely assuming that a challenged law is "generally applicable." The Supreme Court's COVID-related cases should make clear that this approach is no longer tenable.
For instance, in Tandon v. Newsom, 141 S. Ct. 1294 (2021), a group of religious leaders challenged California's ban on private gatherings. The district court and the Ninth Circuit upheld the ban as "neutral and generally applicable" because it applied generally to all private gatherings. But the Supreme Court reversed and struck down the ban, noting that the state actually allowed all manner of public gatherings, including at stores, salons, theaters, concerts, and so on:
Government regulations are not neutral and generally applicable, and therefore trigger strict scrutiny under the Free Exercise Clause, whenever they treat any comparable secular activity more favorably than religious exercise.
Because the law treated carved out exceptions for other activities that posed similar risks as religious gatherings, it was subject to strict scrutiny, which is almost always fatal.
The Los Angeles Fire Code seems to suffer from the same defects, as the prohibition on the use of fireworks has several exceptions, including for movies, TV, theater, and "group entertainment." Add to that the laundry list of groups to whom the entirety of the Fire Code does not apply (Section 5601.1), and you have a situation rather similar to Tandon: The law permits comparable secular activity (i.e., "group entertainment") differently than religious exercise, triggering strict scrutiny.
Because the City would likely be unable to prove that banning religious uses while permitting entertainment uses is the least restrictive way of achieving its interests, the law would be struck down.