L.A. lawmakers want to bar new pot shops from signing up to pay taxes

October 28, 2015 | Christopher Brown

By Emily Albert Reyes Los Angeles Times

Los Angeles lawmakers want to stop letting new medical marijuana shops sign up to pay city taxes because they say there is no way they could be legal under restrictions approved by voters more than two years ago.

“We shouldn’t be making money off of illegal businesses,” City Councilwoman Nury Martinez said.

The council voted Wednesday to request that City Atty. Mike Feuer ask the city finance office to stop issuing business tax registration certificates to newly established pot dispensaries, one of several proposals meant to prevent illegal businesses from using city documents to convince customers that they are operating with city approval.

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Under Proposition D, medical marijuana businesses and the landlords who lease to them can be prosecuted if the shops don't meet several requirements, including being registered with the city in the past and operating far enough from parks and schools.

When the law was passed, city officials estimated that fewer than 140 pot shops would qualify to avoid prosecution. Yet, 447 marijuana businesses have renewed their registrations to pay business taxes this year, obtaining official certificates from the city.

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The phenomenon has fueled “the wholesale practice of hiding behind city documents to try and fool the public … that they are in fact endorsed by the city,” said Sarah Armstrong, director of industry affairs for Americans for Safe Access, which advocates for legal access to cannabis for therapeutic use.

Finance officials have insisted that they aren’t authorized to investigate whether a business is legal and simply take taxpayers at their word. But City Council members have bristled at the idea that the city would continue to register illegal businesses to collect business taxes.


Councilman Paul Koretz called it “an unbelievable practice.” Councilman Marqueece Harris-Dawson said it undermined voter confidence for the city to "cooperate" in any way with businesses that voters had opposed at the polls. And Councilman Mike Bonin compared it to the city registering businesses that sold heroin or shark fins.

To stop it, Martinez says, the finance office should stop issuing tax certificates to new marijuana shops. Existing shops could still renew their registrations, but city lawmakers want to require them to attest under penalty of perjury that they comply with Proposition D beforehand.

In addition, the council wants the finance office to alter registration documents to make it “very clear” that they do not signify that a medical marijuana shop is in compliance with Proposition D.

And they want Feuer to prepare a new law making it illegal for pot shops to display an expired tax registration certificate or one in a different category to mislead the public -- two ways that businesses that don't comply with Proposition D could try to sidestep the new rules.

City lawyers and finance officials were ordered to report back with more details on how they'll make the recommended changes. The proposal passed the council, 13 to 0, with two members absent for the Wednesday vote.



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