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City Council Seeks Tax for Medical Marijuana

November 6, 2010

Medical marijuana neon sign at a dispensary on...
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Voting 9-3, the council directed its attorneys to draft a ballot measure

Updated 10:15 AM PDT, Fri, Nov 5, 2010. NBC Los Angeles

The Los Angeles City Council called Friday for a ballot measure to tax medical marijuana, though its attorneys and other advisers seemed wary of the idea.

Voting 9-3, the council directed its attorneys to draft the ballot measure. They would have to take another vote before Nov. 17 to put the measure on the March 8 ballot.

Councilwoman Janice Hahn sought to establish a tax of $50 per $1,000 of “cash and in-kind contributions, reimbursements, and reasonable compensation provided by members of medical marijuana collectives.”

“I think we’ve seen as of yesterday (Election Day) that voters up and down the state of California — whether or not they believe in the use of marijuana — believe that their cities should be able to receive revenue in the form of taxation of these clinics,” she said. “They were overwhelmingly approved wherever they were on the ballot (Tuesday).”

Hahn estimated the proposed tax would add $3 million to $5 million a year to the city’s coffers.

Several of the council’s advisers, however, questioned whether the city had legal standing to impose such a tax.

Senior Assistant City Attorney Pete Echeverria testified that “it’s (the City Attorney’s Office’s) position that the city should not allow and tax marijuana sales, which would basically amount to a sanctioning of illegal activity.”

Larry Manocchio, the city’s principal tax compliance officer, said medical marijuana collectives are classified as nonprofit organizations and cannot be taxed.

Hahn disputed the notion that the city would be taxing profits from the sale of medical marijuana.

Several other cities tax medical marijuana, Hahn said. In San Jose and La Puente, the tax is $100; Oakland and Richmond, $50, Sacramento, $40; and Berkeley, $25.

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