NEWS: Medical Marijuana Tax Opposed in Los Angeles

by Chelsea Hoffman

Measure M, a medical marijuana tax, will be decided upon by voters Tuesday. This measure will add a 5 percent tax increase on legal medical cannabis dispensaries. It may not seem like a big deal since activists are for the taxation and legalization of the plant, but there is a stipulation to this measure.

Los Angeles plans on limiting the availability of dispensaries to only 100, but the kicker to this is the ones that get to stay aren't chosen by any rhyme or reason. They will be chosen by lottery. This is outraging dispensary owners and activists throughout the city, some who have served patients of medical marijuana for years.

Dispensaries in Los Angeles, who already run as non-profit, already pay a slew of taxes, and many feel that this 5 percent increase along with the lottery is only going to make it more difficult for dispensaries to maintain. This could limit the availability of medical marijuana to patients who are in need.

Source: Gather Inc.

NEWS: Debating Measure M - it’s high time for LA voters to decide on taxing medical marijuana

If passed, Measure M would let the city take home $50 for every $1,000 in pot-shop sales. Sounds like a great way for a city facing a $319-million budget shortfall to generate some much-needed revenue, right? Not so fast, say opponents.

For one thing The Los Angeles City Attorney's office published a ruling that says that even if approved by voters, the measure is illegal because the dispensaries are nonprofits and selling marijuana is a crime.

There's the thorny issue of declaring something illegal and then taxing it. Both sides agree that in all likelihood dispensary operators will be happy to pay the tax for the legitimacy and stability it would seem to grant their businesses. Cynics suggest they also hope that the city's reliance on tax revenue from their businesses would make the police less inclined to raid their establishments and scrutinize their day to day dealings.

Would passage of this measure be perceived as a tacit endorsement for the legalization of marijuana? Would adding another 5 percent tax to the existing 9.75 percent county sales tax be an unfair burden to medical marijuana consumers? Does the projected $10 million in revenues this could raise make all other concerns go up in smoke?

Larry and his guests hash it out.

Source: Southern California Public Radio

EDITORIAL: No on Measure M - Medical Marijuana Sales Tax in Los Angeles

L.A.'s proposed tax on medical marijuana dispensaries would be an unfair and dangerous step.

Measure M is one of those voter initiatives that at first glance look a lot more straightforward than they really are. There are, after all, hundreds of medical marijuana dispensaries in Los Angeles — just look for the green crosses — that pay state sales tax but not city taxes. Measure M would make them pay their fair share and then some, by imposing a steep gross receipts tax. That sounds like a reasonable way to help the city avoid cuts in public services as it digs itself out of a budget hole. But it's a dangerous step.

State lawmakers and municipalities still haven't agreed on how to regulate a drug that the state considers medicinal and the federal government considers illegal, so cities are deciding for themselves. Several — including Oakland, Berkeley, Sacramento, San Jose and Long Beach — have already approved taxes similar to the one that would be imposed by Measure M. And yet the city attorney's office believes that Los Angeles "should not, and indeed legally cannot, allow and tax marijuana sales," and opines that passing Measure M "would be of little or no effect." How can that be?

At the heart of the question is whether or not medical marijuana dispensaries — or collectives, or cooperatives, or whatever they choose to call themselves — are for-profit operations. Back when Gov. Jerry Brown was California's attorney general, he issued an opinion that they can operate only as nonprofit cooperatives or collectives in which patients or their "primary caregivers" grow marijuana and supply other members. They can charge members for their cannabis, but only enough to cover their overhead costs. Yet Brown's opinion hasn't been tested in court, and there is no telling how many of California's storefront dispensaries are really operating as nonprofits. In December, the operators of a San Jose marijuana "collective" were charged with illegal sales and money laundering after police said they discovered two sets of books, one showing an operating loss and the other showing a profit of $222,238.

If marijuana collectives are genuinely nonprofits, they're exempt from city taxes. So why have Long Beach and other cities been able to tax them? Because to be considered tax-exempt charitable nonprofits, organizations have to register as such with the Internal Revenue Service, which is like sending a cable to the federal government to tell it you're distributing a product that Washington considers illegal. Very few, if any, medical marijuana facilities have done this, opting instead to pay local taxes.

Getting in bed with a quasi-legal industry has drawbacks. If city government became reliant on tax revenue from medical marijuana sellers, city officials would be less likely to pass ordinances restricting their operations and police would be less inclined to raid their establishments to check whether they're really running on a nonprofit basis. A decrease in such scrutiny would encourage more illegal for-profit dispensaries, which draw other kinds of crime. Prices for a drug that many people use to relieve suffering (even if others use it to get high) would rise, which is why legitimate patient advocates such as Americans for Safe Access oppose taxation measures.

We agree with Brown that medical marijuana should only be distributed by nonprofit cooperatives or collectives. If they're truly operating that way, it's unfair for the city to tax them, and if they aren't, they should be shut down rather than taxed. That's why we urge a no vote on Measure M.

Source: Los Angeles Times

NEWS: Proposed cannabis tax sparks a heated debate

Voters will face a familiar, burning issue on the March 8 city ballot: Marijuana.

In contrast with last November's failed California proposition to legalize recreational pot use, Los Angeles' more complicated Measure M asks if the city should impose a hefty tax on medical-marijuana dispensaries.

Proponents say requiring dispensary operators to "pay their fair share" - in this case, 5percent of gross receipts - could raise $10million a year for the city's deficit-plagued general fund.

Opponents claim the proposal won't fly because medicine and the nonprofit organizations that dispense it cannot be taxed, and they worry that if the city makes revenue from dispensaries, it will be encouraged to allow more of them.

While the two sides debate the details, voters may be guided more by their general attitudes, such as their overall feelings about marijuana, said Jessica Levinson, who analyzes ballot initiatives for the L.A.-based Center for Governmental Studies.

"It really comes down to what's important to voters," Levinson said. "If they think, `Yes, this is a measure that has problems, but people use medical marijuana and the city needs money,' then I think they would vote yes.

"If voters say, `Morally, we're against the sale of marijuana no matter what the use is,' or if they're for medical marijuana but think the current system is being abused, then they would vote no."

Measure M was placed on the ballot by the City Council, which is trying to climb out of a $350 million budget hole in the next fiscal year.

It comes as the smoke clears from last November's marijuana initiative battles.

California's Proposition 19 would have legalized - and taxed - up to one ounce of marijuana for recreational use by adults. The initiative lost 53.5-46.5 percent. Its backers are talking about trying again in 2012.

At the same time last year, voters in nine California cities - including Sacramento, Oakland and San Jose - approved medical-marijuana taxes similar to what Los Angeles is considering.

Signatures on the official "Yes on M" argument include those of City Council members Janice Hahn and Paul Koretz, and Pat McOsker, president of the United Firefighters of Los Angeles City, Local 112.

"The city needs revenue. I know that as well as anyone," said McOsker, who says the Los Angeles Fire Department budget has shrunk to $495 million from $560 million two years ago, reducing the number of emergency responders by 156.

McOsker said United Firefighters' endorsement of Measure M doesn't mean it necessarily endorses medical-marijuana cooperatives, let alone recreational pot smoking.

"The voters of California decided (in 1996) that cooperatives are legal. What we're saying is they should pay their fair share (of taxes)," McOsker said.

The official "No on M" argument is signed by LAPD Chief Charlie Beck, Sheriff Lee Baca, District Attorney Steve Cooley and Council members Jan Perry and Bernard Parks.

"I think what we do (if Measure M passes) is we legitimize something that is against the law," Beck said in an interview. "Right now the law says we allow it to be dispensed because it's a medicine. We don't tax medicine. ... Let's be consistent."

Beck added: "These (dispensaries) are not good for your neighborhoods. If they become seen as a cash cow to (city officials) that are desperate, they're going to want more of them."

Measure M's opponents include the Oakland-based medical-marijuana advocacy group Americans for Safe Access, which contends a tax could make medical pot costlier for patients.

Source: Contra Costa Times

VIDEO: Los Angeles Considers Taxing Medical Marijuana at Council Meeting [11-16-2010]

Los Angeles City Council Meeting November 16, 2010
Agenda Item #14

COMMUNICATION FROM CITY ATTORNEY, RESOLUTIONS and ORDINANCE FIRST CONSIDERATION relative to submitting to the voters a certain tax measure to impose a tax on medical marijuana collectives in Los Angeles and calling a Special Election and consolidating it with the City's Primary Nominating Election to be held on March 8, 2011.

Recommendations for Council action:

1. ADOPT the accompanying RESOLUTION providing that a certain proposal to amend the Charter of the City of Los Angeles be submitted to the qualified electors of the City.

2. ADOPT the accompanying BALLOT TITLE RESOLUTION, as follows:

TAXATION OF MEDICAL MARIJAUANA COLLECTIVES. PROPOSITION ___

In order to fund general municipal services, including but not limited to such matters as police protection and crime suppression services, fire prevention and suppression services, park and recreation facilities, and general improvements throughout the City, shall a tax be authorized on marijuana collectives of $50 per $1,000 of gross receipts recognizing that the sale of marijuana is illegal?

3. PRESENT and ADOPT the accompanying ORDINANCE, SUBJECT TO THE APPROVAL OF THE MAYOR, calling a Special Election to be held on Tuesday, March 8, 2011 for the purpose of submitting to the qualified voters of the City of Los Angeles a certain Charter amendment and consolidating this Special Election with the City's Primary Nominating Election to be held on the same date.

NEWS: L.A. City Council Considers Taxing Medical Marijuana

The Los Angeles City Council called today for a ballot measure to tax medical marijuana, though its attorneys and other advisers seemed wary of the idea.

Voting 9-3, the council directed its attorneys to draft the ballot measure. They would have to take another vote before Nov. 17 to put the measure on the March 8 ballot.

Councilwoman Janice Hahn sought to establish a tax of $50 per $1,000 of "cash and in-kind contributions, reimbursements, and reasonable compensation provided by members of medical marijuana collectives."

"I think we've seen as of yesterday (Election Day) that voters up and down the state of California -- whether or not they believe in the use of marijuana -- believe that their cities should be able to receive revenue in the form of taxation of these clinics," she said. "They were overwhelmingly approved wherever they were on the ballot (Tuesday)."

Hahn estimated the proposed tax would add $3 million to $5 million a year to the city's coffers.

Several of the council's advisers, however, questioned whether the city had legal standing to impose such a tax.

Senior Assistant City Attorney Pete Echeverria testified that "it's (the City Attorney's Office's) position that the city should not allow and tax marijuana sales, which would basically amount to a sanctioning of illegal activity."

Larry Manocchio, the city's principal tax compliance officer, said medical marijuana collectives are classified as nonprofit organizations and cannot be taxed.

Hahn disputed the notion that the city would be taxing profits from the sale of medical marijuana.

She said customers or patients give the nonprofits money to "reimburse" them for the cost of hiring workers, rent, utilities, and other expenses.

She said the proposed ballot measure would enable the city to collect a tax of $50 out of every $1,000 of that money.

Several other cities are doing the same, Hahn said.

In San Jose and La Puente, the tax is $100; Oakland and Richmond, $50, Sacramento, $40; and Berkeley, $25. She added that Long Beach is considering a tax of $50, she said.

Source: Beverly Hill Courier

NEWS: City Council Seeks Tax for Medical Marijuana

Voting 9-3, the council directed its attorneys to draft a ballot measure

The Los Angeles City Council called Friday for a ballot measure to tax medical marijuana, though its attorneys and other advisers seemed wary of the idea.

Voting 9-3, the council directed its attorneys to draft the ballot measure. They would have to take another vote before Nov. 17 to put the measure on the March 8 ballot.

Councilwoman Janice Hahn sought to establish a tax of $50 per $1,000 of "cash and in-kind contributions, reimbursements, and reasonable compensation provided by members of medical marijuana collectives."

"I think we've seen as of yesterday (Election Day) that voters up and down the state of California -- whether or not they believe in the use of marijuana -- believe that their cities should be able to receive revenue in the form of taxation of these clinics," she said. "They were overwhelmingly approved wherever they were on the ballot (Tuesday)."

Hahn estimated the proposed tax would add $3 million to $5 million a year to the city's coffers.
Several of the council's advisers, however, questioned whether the city had legal standing to impose such a tax.

Senior Assistant City Attorney Pete Echeverria testified that "it's (the City Attorney's Office's) position that the city should not allow and tax marijuana sales, which would basically amount to a sanctioning of illegal activity."

Larry Manocchio, the city's principal tax compliance officer, said medical marijuana collectives are classified as nonprofit organizations and cannot be taxed.

Hahn disputed the notion that the city would be taxing profits from the sale of medical marijuana.

Several other cities tax medical marijuana, Hahn said. In San Jose and La Puente, the tax is $100; Oakland and Richmond, $50, Sacramento, $40; and Berkeley, $25.

Source: NBC Los Angeles

NEWS: Measure B would tax marijuana if voters approve Proposition 19

LONG BEACH — If California voters approve Proposition 19 on Nov. 2 to legalize recreational marijuana, Long Beach officials want to be ready to capitalize on it.

Long Beach's Measure B would create a new category of "marijuana business" and would tax the drug.

The measure would impose a tax of $150 per $1,000 of gross receipts for marijuana sales, and a tax of $25 per square foot on all improvements to a site used by a marijuana business to cultivate or grow marijuana.

Marijuana businesses that qualify as nonprofits under state law would pay $10 per square foot of improvements instead of paying a tax based on gross receipts.

The tax would be adjusted each year for inflation.

However, the tax wouldn't affect any marijuana facility that has a valid medical marijuana permit.

Medical marijuana is already legal in California, and Long Beach has created new regulations for medical marijuana collectives. City officials are in the process of granting permits to collectives that meet all of the qualifications, although some collectives have filed lawsuits challenging Long Beach's law.

Long Beach Director of Finance Lori Ann Farrell says that Measure C has the potential to produce millions of dollars in revenue for Long Beach, which has faced years of budget deficits and has more to come.

The revenue from the marijuana tax could be used to pay for police, firefighters, libraries, parks and other services, Farrell says.

The measure has no official opposition, though it is dependent on Proposition 19 passing. That state measure has plenty of advocates and opponents.

See the full text of the measure at the Long Beach City Clerk's website.

Source: Contra Costa Times

NEWS: Oakland allows industrial-scale marijuana farms

OAKLAND -- Oakland's City Council late Tuesday adopted regulations permitting industrial-scale marijuana farms, a plan that some small farmers argued would squeeze them out of the industry they helped to build.

To address concerns from smaller farmers, the council pledged to create regulations on regulating small- and medium-size marijuana farms this year. Council members and proponents of marijuana cultivation regulation viewed the proposal as smart public policy: It would generate revenue, ensure that fire and building codes are enforced, keep neighborhoods safe from robberies, and further position Oakland as the center of the state's cannabis economy.

"It's really important for Oakland to be a vital part of that growth and development for licensed facilities," said Councilwoman Rebecca Kaplan.

But many of the folks on the front lines of the young industry say it will change the culture of what they've built.

They say industrial farms will turn a grassroots economy into a corporate one, driving down costs but also eroding the quality of the marijuana, which state voters defined in 1996 as medicine.

The most influential critic was Steve DeAngelo, owner of Oakland's Harborside Health Center, the largest medical marijuana dispensary in the nation.

His dispensary buys from some 500 different growers, meaning Harborside offers about 100 varieties at any time. Permitting only industrial operations would reduce variety, he said.

"Government should not choose the winners and losers but create a level playing field," he said. "Some people might prefer mass production, assembly-line cannabis that costs less. Others might prefer cannabis grown by a master gardener in a smaller plot.

"Let the market sort it out," he said.

The regulations will award permits to four indoor marijuana farms. There will be no size limit, but there have been proposals for farms as large as 100,000 square feet - about the size of two football fields.

DeAngelo said he would prefer farms of various sizes.

The regulations will require applicants to have a minimum of $3 million worth of insurance, hire security and pay a $211,000 annual permit fee.

The city will be begin to issue permits in January and will allow the industrial farms to sell only to medical cannabis dispensaries.

But if state voters pass Prop. 19, a November initiative that would legalize recreational use of marijuana, proponents believe the city would be well situated for the booming industry.

By regulating certain growers, Oakland also plans to crack down on illegal grows, said Arturo Sanchez, an assistant to the city administrator.

His comments immediately prompted hissing and booing in the crowd.

Oakland has long been pushing the boundaries of marijuana legalization.

In 2004, voters passed Measure Z, declaring marijuana a low concern for law enforcement. In 2009, voters passed Measure F to tax medical cannabis at 1.8 percent.

The taxation, believed to be the first of its kind in the nation, was a step toward legalization.

Source: San Francisco Chronicle