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Monday, July 20, 2009

Chronic City: To Tax Pot, Or Not? Oakland Votes Tuesday

Posted By on Mon, Jul 20, 2009 at 3:59 PM

click to enlarge The color of money - PHOTO: CHRON.RON
  • Photo: chron.ron
  • The color of money
Mail-in voting closes Tuesday on Measure F, a new ordinance in Oakland which would impose a special tax on sales of medical Marijuana in the city's dispensaries. The measure would make Oakland the first city in the United States to have a business tax category for Marijuana merchants.

Dispensaries have already been paying a rate of $1.20 per $1,000 of gross receipts. Measure F would create a separate category for Marijuana sellers, at a rate of $18 per $1,000 of sales. Sales taxes is already assessed on purchases.

Many activists see the proposed ordinance as an incremental step toward complete legalization. After all, once government bean counters associate the Marijuana business with a positive revenue stream, they're likely going to think in much more favorable terms about the herb -- and be a lot less inclined to crack down on dispensaries.

The ordinance would create a new business tax category in Oakland

for legal Marijuana merchants (of which Oakland currently has only

four), and would likely bring the cash-strapped city hundreds of

thousands of dollars a year in additional revenue. Oakland City Auditor

Courtney Ruby estimates initial revenues from the proposed ordinance at

$294,000 annually.

Councilwoman Rebecca Kaplan

said she believes the actual take could be closer to $1 million. The

city's four dispensaries report that they took in $19.7 million in the

last fiscal year. 

"I don't think it's a turning point... but it starts the ball rolling," Oakland City Attorney John Russo told the San Francisco Chronicle.

"As cities start taxing pot and making money, other government entities

are going to start asking: 'Why aren't we getting in on this revenue


Local Marijuana dispensaries (along

with community groups and even local police) almost unanimously support

the new tax, seeing it as a way to further legitimize their businesses.

And it's not hard to understand their desire to be seen as legitimate,

in a city that not so long ago was on the front lines of the war

between federal and state Marijuana laws. In 2001, the U.S. Supreme

Court upheld the DEA's shutdown of an Oakland dispensary, finding no

"medical necessity" exemptions in federal pot laws.


issue of Marijuana as an law enforcement concern for the Oakland Police

Department was clarified by 2004's Measure Z, which instructed city

cops to make Marijuana laws their lowest priority.

Los Angeles Looking North


unlikely that anyone is watching the outcome of Tuesday's vote more

closely than members of the Los Angeles City Council. Last week,

Councilwoman Janice Hahn called for L.A. to get its share of money from

the city's pot dispensaries.

Hahn suggested

during last week's city council meeting that a city tax on medical

Marijuana could provide millions of dollars for Los Angeles, which, like

Oakland, is in dire straits financially. Between 400 and 800 pot shops

(according to whose estimate you believe) operate in Los Angeles; none

are currently taxed. Hahn argues that Marijuana should be taxed just

like any other commodity.

Pundits believe a pot tax would be a slam-dunk politically, according to the L.A. Weekly.

"Although Californians, particularly Angelenos, have repeatedly shown

their tolerance for individual Marijuana use, I would bet most of us

would view such a tariff as just another sin tax -- the kind voters

almost routinely pass on cigarettes and liquor," writes Steven Mikulan.

Sacramento's Watching, Too...


can believe that if Oakland -- and Los Angeles -- start raking in piles

of cash from Marijuana dispensaries, state legislators will be taking


As reported in this space,

Assemblyman Tom Ammiano (D-San Francisco) earlier this year proposed a

measure that would legalize and regulate Marijuana sales to adults in


Particularly in view of the

state's economic woes, the proposal has attracted serious interest,

especially since last week's report that indicates a Marijuana tax

could fatten state coffers by as much as $1.4 billion a year.

Opposing View: Unfairly Taxing Patients?


lost in the excitement of the rapidly-changing situation on the ground

is the fact that the proposed city taxes on Marijuana might be seen as

unfairly penalizing the sick and dying, since they'll be assessed

solely on medical users of the herb.


[state-wide] bill specifically exempts medical patients from the tax,"

medical Marijuana patient/activist J. Craig Canada told the SF Weekly.

"Oakland and Los Angeles, on the other hand, are proposing taking money

the sick and dying spend for medicine and giving it to politicians, to

balance the budget."

Canada, of Santa Cruz,

says he's been a medical Marijuana patient since 1995, when he became a

member of the San Francisco Cannabis Buyers Club a year before

Proposition 215 legalized medical Marijuana statewide. In 2004, he

became the first person in San Bernardino County to have felony

cultivation of Marijuana charges dismissed on medical grounds.


a regressive tax," Canada said. "The people who use the most Marijuana

and need the highest potency are the sickest, and probably the poorest.

Medicine should not be taxed."

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