Los Angeles Voters Decide Whether To Tax Marijuana Dispensaries

The cash-strapped city of Los Angeles will try to create a new source of revenue by asking voters today to tax medical marijuana dispensaries.

Measure M, if approved, would allow to the city to collect $50 out of each $1,000 in “gross reimbursements” that dispensaries receive from their patients.

That could generate $10 million a year, which the city can use to pay for basic services such police, libraries and street repairs, according to proponents.

“This is something we cannot say `no’ to,” Councilwoman Janice Hahn said.

But the city and county’s top law enforcement officials disagree.

Police Chief Charlie Beck, Sheriff Lee Baca and District Attorney Steve Cooley all signed the argument against Measure M, pointing out that federal law bans growing, possessing or consuming marijuana for any purpose.

“The city should not place a tax on something our federal government considers a Schedule I narcotic and against the law,” they argued.

Testifying before the City Council last year, Los Angeles’ principal tax compliance officer, Larry Manocchio, also noted that collectives are classified as nonprofit organizations and therefore cannot be taxed.

But Hahn disputed the notion that the city would be taxing “profits” from the sale of medical marijuana. She said the city would instead be taking a portion of what patients give dispensaries as “reimbursement” for the costs associates with cultivating weed, such as worker salaries, rent and utilities.

Several other cities have already imposed such a tax, Hahn said. San Jose and La Puente each charge $100 per $1,000 in gross reimbursements; Oakland and Richmond, $50, Sacramento, $40; and Berkeley, $25. Long Beach is considering a tax of $50.

But Americans For Safe Access spokesman Kris Hermes warned that the ballot measure would cause suffering among medical marijuana patients.

“Measure M would impose an additional 5 percent tax on the medication that patients in the city of Los Angeles would have to pay,” he told City News Service last month. “That’s on top of the sales tax, which is nearly 10 percent in Los Angeles, that they already pay.”

“The medical marijuana that is sold in Southern California is fairly expensive — in some cases prohibitively expensive — for medical marijuana patients, especially those folks that are on low income or fixed income,” he added. “To have to pay nearly 15 percent on top of that is very burdensome.”

Hermes said an eighth of an ounce of medical marijuana typically costs $40-$60, and certain high quality varieties are even more expensive.

Another group, the Greater Los Angeles Collective Alliance, vowed to oppose the ballot measure because the City Council intends to use a lottery to decide which dispensaries can continue operating in their current locations.

“The Los Angeles City Council is using a lottery, rather than selecting the oldest facilities with clean operating records and allowing them to serve the patient community,” stated Yamileth Bolanes, president of the Greater Los Angeles Collective Alliance. “To demand patients to pay a tax, which would then be used to gamble away patient safety, is simply unacceptable.”

The council amended its medical marijuana ordinance last month after a judge ruled parts of it unconstitutional. The vote legitimized dispensaries that opened on or before Sept. 14, 2007, and banned the rest.

To break up clusters of dispensaries, they decided to select only 100 of them to undergo inspections, and then hold a lottery to determine their order on a “priority list.” Those at the top of the list will get the first pick of locations.

There are hundreds of collectives across Los Angeles, but only nonprofit organizations whose members cultivate marijuana for medical purposes are considered legal.