As L.A. looks to shutter dispensaries, voters choose to cash in

March 09, 2011

Peter Hecht, Sacramento Bee

As the city council in California's largest city seeks to shutter scores of medical marijuana dispensaries, Los Angeles voters just issued a resounding declaration: If you can't close 'em, tax 'em.

Fifty-nine percent of voters approved Los Angeles' "'M' for marijuana" Measure M, allowing the city to impose a five percent tax on gross dispensary receipts - on top of sales taxes they must pay to the state.

While pot taxes have been endorsed by many dispensaries and medical marijuana advocates as a path to political legitimacy, Measure M was fought by an L.A. dispensary association and strongly opposed by Americans for Safe Access, a leading medical marijuana patients advocacy group.

"We are in times when cash-strapped local governments are seeking creative and inventive ways to create local revenues," said Kris Hermes, an ASA spokesman. "But it's really unfortunate that it is on the back of our most vulnerable, the patients."

Meanwhile, as reported in the Sacramento Bee today, the state of California is aggressively pursuing sales taxes due from a medical marijuana industry that handles hundreds of millions of dollars in marijuana transactions. And cities are passing ordinances for new local taxes.

Los Angeles City Council member Janice Hahn said the city hopes to take in as much as $10 million from its new dispensary tax, even as it seeks to cap its number of dispensaries at 100 - down from as many as 800 at the wild L.A. market's peak last year.

In Oakland, where voters in November increased local dispensary taxes from 1.8 percent to 5 percent, the city is expecting an increase in medical pot revenues from $434,000 last year to $1.4 million this year. Sacramento is due to impose a four percent voter-approved medical pot tax on July 1.

Eleven California cities now have local medical marijuana taxes. San Jose, which has seen a boom in local cannabis clubs, has voter approval to impose taxes of up to 10 percent. Rancho Cordova, which doesn't permit dispensaries, has approval to impose a 12 to 15 percent tax, just in case some future City Council allows medicinal pot clubs to open in town.

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