Thursday, August 5, 2010

Oakland council opts for tiered medical pot tax increase

http://www.mercurynews.com/breaking-news/ci_15582594?nclick_check=1


OAKLAND — After two hours of pitched public comment and council deliberation, Oakland City Council members decided to table a proposal that could have brought in up to $28 million through a medical marijuana tax increase.

Instead, they opted for a tiered tax rate based on a last-minute proposal by at-large Councilmember Rebecca Kaplan. She announced the new plan Thursday during a special City Council meeting.

The new plan includes a 2.5 percent tax on medicinal marijuana dispensaries, putting Oakland's tax in line with Berkeley's.

Oakland's tax would be as much as 8 percent on cultivators, allowing the city to capitalize on new rules approved by the council just days ago allowing large-scale medical marijuana cultivation.

The city also would levy up to a 10 percent tax rate on facilities that sell marijuana for recreational use if California voters in November pass a statewide initiative to legalize marijuana.

The rate hikes would not be retroactive.

Kaplan justified the different rates between growers and sellers, saying other industries are taxed differently based on whether they are retail- or production-related.

The original plan, an increase of up to 12 percent, faced hot opposition from moderate-size dispensary operators and growers. Steve Deangelo, executive director of Harborbay Health Center — the largest dispensary in California — warned that the plan would force Oakland dispensaries and growers to close down, taking potential revenue with them.

He refused to disclose how much the nonprofit dispensary pays its highest-earning worker.

The council will consider the new plan Monday during a special meeting scheduled for 4 p.m.

The tax was one of seven aimed at boosting revenue to the cash-strapped city, which is facing what could be a $50 million budget gap next year.

Council members stopped short of putting all the measures, some of which were reworked during the special City Council meeting, on the November ballot.

A set of telephone taxes faced little opposition. But there was little support for a quarter-cent sales tax hike that would bring the rate to 10 percent.

Equally unpopular was an expanded utility tax that would raise an estimated $7.6 million by taxing garbage collection and water use.

The council deadlocked over a measure aimed at allowing the city to collect a special Measure Y public safety tax worth $20 million, even though the number of police officers are now below the 739 minimum.

In addition, the council voted to change a proposal to amend the city's Just Cause laws before deciding whether it should go before voters.

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