Oakland Could Lose Millions In Tax By Nixing Marijuana Farms


Photo: Gearfuse
Don’t start counting the money just yet, Brokeland.

​Don’t start counting the money just yet — Brokeland, I mean Oakland, may not get that pot tax bonanza, after all.

Fiscally-challenged Oakland, California could lose millions of dollars in potential tax revenue if the city bows to pressure to scale back or cancel controversial plans to license four large-scale commercial medical marijuana farms.

Supporters say the measure approved by the city council last July could provide the city with a tax windfall of $10 million or more each year by authorizing four city-licensed cannabis cultivation facilities, reports Michael Montgomery at California Watch.

Under the city ordinance, marijuana mega-farms would be registered and taxed as businesses operating separately from dispensaries, which already earn Oakland more than a $1 million a year.
Oakland’s promising pot plans were going swimmingly until December when the federal Justice Department as well as the Alameda County District Attorney Nancy O’Malley warned the Oakland City Council that they could end up in jail for violation of California’s medical marijuana laws.
“It remains an open question whether public officers or public employees who aid and abet or conspire to violate state or federal laws in furtherance of a city ordinance, are exempt from criminal liability,” D.A. O’Malley warned in a letter to Mayor-elect Jean Quan.
At that point, council members blinked, voting 7-1 to suspend the plans, at least until they could be modified to meet the objections of law enforcement.
Even if the council revives the plan now, some supporters say it’s uncertain whether Oakland will find a way to get tax money directly from pot growers — which means, of course, a big loiss to city tax coffers.
Taxing licensed marijuana growing warehouses is another “open question,” according to Oakland City Councilwoman Rebecca Kaplan, co-author of the original plan.
“Whether entities can or will be taxed separately is something that the council asked staff to research and report back,” Kaplan said. “At this time, I have not taken a position on that question.”
No city or county in California currently taxes medical marijuana growers directly, according to Kris Hermes, press liaison at advocacy group Americans for Safe Access (ASA). However, Berkeley is also considering a plan similar to Oakland’s to tax city-licensed pot farms.
One enormously complicating factor is that, according to Oakland City Attorney John Russo as well as state and federal law enforcement agencies, taxing cannabis farms as “distinct business entities” could violate state guidelines, which dictate that medical marijuana is cultivated within a “non-profit collective” of patients and caregivers.