Cash-Hungry Long Beach Wants To Tax Marijuana



‚ÄčLong Beach is joining other California cities which are looking at taxing marijuana to boost cash-starved city coffers.

The City Council on Tuesday, July 6, will consider a proposal to put a measure on November’s ballot that would levy a 5 percent tax on medical marijuana dispensaries.
Another tax, of up to 10 percent, would only go into effect if California voters also pass Proposition 19, which would legalize and regulate marijuana for recreational use, and allow its taxation, reports Tony Barboza at the Los Angeles Times.

“Currently, medical marijuana collectives operate in business corridors alongside businesses that pay business license taxes,” noted a City of Long Beach Department of Financial Management staff report (PDF) authored by DFM manager Lori Ann Farrell.
“To promote equity, it is recommended that medical marijuana collectives are also assessed a business license tax,” the report says.
California’s explosive growth in marijuana dispensaries — and now, the potential legalization of recreational cannabis statewide — is seen as an opportunity by many cities desperately looking for new tax revenues.
Oakland has already adopted a medical marijuana tax, with the approval of the city’s dispensaries. Berkeley and Sacramento, among other California cities, are considering similar measures.
In Oakland, estimates have the city getting up to $1 million from a tax on gross receipts at the city’s four licensed dispensaries. When Long Beach, home to about 85 dispensaries, eventually grants permits, up to 30 locations are expected to conform to the regulations and continue business, according to Zach Behrens at the LAist.
On September 20, a lottery will take place to determine which among dispensaries that are “too close together” will be allowed to operate, according to Paul Eakins at the Long Beach Press-Telegram. Long Beach’s ordinance requires that pot shops must be at least 1,000 feet away from each other.
Long Beach, with its $18.5 million budget deficit, has some City Council members ready to consider taxation of marijuana dispensaries, especially since the council voted in May to allow and regulate the pot shops.
“We tax alcohol. We tax cigarettes. Why shouldn’t we look at taxing marijuana?” asked Long Beach Councilman Patrick O’Donnell, conveniently forgetting that neither alcohol nor tobacco is considered medicine (marijuana is), and that no other medicine is taxed.
“We’re turning over every rock to find new revenues, and under one of those rocks may be marijuana,” O’Donnell said.
Americans for Safe Access, a medical marijuana advocacy group, opposes taxing medical marijuana because it believes pot should be treated the same as any other doctor-approved medications, which are untaxed.
ASA fears the tax would be passed on to patients who may not be able to afford it, reports Matt Coker at the OC Weekly.
ASA considers medical marijuana to be equivalent to prescription drugs, which aren’t taxed.
And if a tax absolutely must be enacted, according to ASA spokesman Kris Hermes, “the tax burden should be removed from the patient to the extent possible.”
“It’s difficult to tell cities that are cash-strapped in tough economic times that you can’t tax this substance,” Hermes said. “But there are other methods that local governments could use to raise the money; one of those methods is to tax the production side.”
Long Beach Councilwoman Gerrie Schipske seemed inclined to agree.
“If marijuana distributed at a collective is considered medicine, how could we tax it?” she wrote in her blog Friday.
“California does not tax pharmaceuticals,” Schipske wrote. “So how then is it OK to tax this medicine?”
Actually instituting a marijuana tax in Long Beach would require a public hearing in August, an OK from the City Council and then voter approval in November.

Since no local offices are up for election in Long Beach this year, the city would have to declare a fiscal emergency to get the measure on the ballot.