Medical marijuana dispensaries bring in $8.6 million in taxes to Los Angeles coffers
March 12, 2014 | Kris Hermes
Rick Orlov, Los Angeles Daily News
Even as the city of Los Angeles launched a new effort to close pot shops, it is benefiting by $8.6 million in business taxes collected from the medical marijuana dispensaries over the past three years.
City Finance Director Antoinette Christovale reported the revenue this week after City Attorney Mike Feuer and LAPD Chief Charlie Beck announced plans to begin advising landlords of the risks of renting out space to possibly illegal shops.
Since April 2011, Christovale’s office has 1,400 tax registration certificates on file from pot dispensaries, following the passage of Proposition D. The measure limited the number of collectives to the 100 that originally registered with the city when an interim control ordinance was in effect.
“The Office of Finance issues a business tax registration certificate, which is not a license or permit to operate in the city of Los Angeles,” Christovale said. “This certificate signifies that a business has registered to pay taxes.”
Feuer’s office this week began sending out letters informing property owners of the jeopardy they could face if they lease to a medical marijuana clinic not authorized by the city. While limiting the number of collectives, Proposition D also increased the tax from $50 to $60 per $1,000 of gross receipts.
Feuer noted he was intent on closing down those shops operating illegally. So far, he said, more than 300 individuals have been prosecuted and 27 medical marijuana clinics shut down. But he also said he was concerned the tax registration certificates are being used to allow some clinics to say they are legal.
Feuer said he will not ask the Finance Department to stop issuing the tax registration forms but that his office will be going after any clinics new to open.
The situation creates a quandary for city officials, said Kris Hermes, spokesman for Americans for Safe Access. “It’s a substantial amount of money,” Hermes said. “Whether or not that should be the driving force to keep dispensaries open is another argument. But this also shows the lackluster enforcement effort by the city so far.
“If the goal is to bring more money in to the city, I would say they should find a way to keep them all open. Also, I would say they need to look at the demand in the city and whether it is outpacing the supply.”
Americans for Safe Access supported Proposition D but had hoped the city would adjust the number of clinics that would be allowed to operate.