City council wants to tax pre ICO collectives

Hahn wants to tax LA marijuana dispensaries

By Gene Maddaus Staff Writer
Posted: 07/15/2009 07:13:56 PM PDT

Councilwoman Janice Hahn is leading an effort to impose a tax on marijuana
sales as Los Angeles officials look for ways to close a gaping structural
deficit in its budget.

Hahn, who represents an area from San Pedro to Watts, made a motion
Wednesday to explore taxing revenues of marijuana dispensaries.

"We're always looking for a way to raise more revenue," Hahn said, noting
the tax could bring in millions of dollars. "The legitimate clinics don't
mind this. They feel like it makes them more legitimate, and more a part of
the city family."

The city has imposed a moratorium against marijuana dispensaries, but
hundreds of clinics have opened anyway in recent months thanks to a
"hardship" exemption in the city ordinance.

The council is now trying to shut down those clinics, which number more than
500, prompting an outcry from dispensaries and their supporters.

Hahn said the marijuana tax - which would have to be approved by the voters
- is aimed at the approximately 200 clinics that opened legally before the
moratorium was approved, and is not intended to legitimize the "hardship"
clinics.

Tyler Roberts, the co-owner of The CannaVerse, recently opened his club in
San Pedro under a hardship exemption. He said he is worried that the city
will deny the exemption when it comes up for a hearing.

"I would love to pay a tax and to be able to know that my store is just as
legitimate as the locksmith next door to me," Roberts said. "If it
straightens out this hardship exemption crap they've got us going through, I
would be all for it."

Assemblyman Tom Ammiano, D-San Francisco, has offered a bill to tax
marijuana statewide, much like alcohol or cigarettes. State tax officials
believe a $50 per ounce tax would generate $1 billion a year in new
revenues, which would help close the state's budget gap.

The city of Oakland is also moving forward with a 1.8 percent tax on
revenues at the city's four dispensaries. Officials believe that tax, which
is on the city ballot next week, will bring in $400,000 a year.

Stewart Richlin, an attorney who has represented many marijuana clinics in
their battle against the city of Los Angeles, said that any new tax should
be modest.

"The power to tax is the power to destroy," Richlin said. "If it's going to
be an unusual or unreasonable tax, it's going to lead to people going to the
black market."

Richlin suggested that the revenues should be earmarked for drug education
or subsidies for low-income patients who cannot afford marijuana. He
objected to likening marijuana to "sin tax" items like alcohol and
cigarettes because he believes marijuana ought to be regulated as a
prescription drug.

Dispensaries currently pay business license fees and sales tax.

Councilmen Dennis Zine and Bill Rosendahl joined Hahn in making the motion.
Rosendahl would like to see the federal government drop its objections to
state laws permitting medical marijuana laws. He also said he favors taxing
the "hardship" clinics for as long as they are allowed to stay in business.

"If citizens come to me with complaints, I support shutting them down,"
Rosendahl said. "If people don't complain, I'm not going to go make an issue
out of it."

He said he had joined police officers on a visit to a dispensary in Venice
to check compliance with city laws.

"To see the prices that they have," he said, "one would think there could be
a very handsome revenue stream for the city."