Pubdate: Wed, 22 May 2013
Source: San Jose Mercury News (CA)
Copyright: 2013 San Jose Mercury News
Contact:  http://www.mercurynews.com/
Details: http://www.mapinc.org/media/390
Author: John Woolfolk
Page: B1

SAN JOSE TO RAISE POT TAX

City Also Decides on 8- 3 Vote to Increase Legal Funding to Defend
Pension Reform

SAN JOSE - The San Jose City Council voted unanimously Tuesday to
raise the city's tax on marijuana collectives to 10 percent starting
in July.

Raising the city's marijuana tax was among Mayor Chuck Reed's budget
recommendations for the coming year. San Jose voters in 2010 approved
a tax on medical marijuana providers of up to 10 percent of gross
receipts. The council later that year set the rate at 7 percent, with
collection beginning in March 2011.

Though medical marijuana advocates have grumbled about the city's tax,
no one spoke against the increase Tuesday. Tuesday's vote directed
preparation of an ordinance raising the tax, which the council is
expected to vote on June 4.

The current 7 percent marijuana tax generates $ 3.9 million annually,
city officials said. Raising the rate to the maximum 10 percent would
generate an additional $ 1.5 million, city officials said, for a total
of about $ 5.4 million a year. The tax money could be used toward a
variety of city programs including police and fire protection, street
maintenance and pothole repair, parks and libraries.

There are 96 marijuana dispensary or collective businesses operating
in San Jose, according to city officials.

The City Council in 2011 had adopted zoning and regulatory ordinances
to limit the number and location of marijuana businesses in San Jose.
The rules would have allowed just 10 marijuana collectives, limited
them largely to industrial areas and required them to grow all their
weed onsite. But activists later that year succeeded in qualifying a
ballot referendum on repealing the laws, which they argued were overly
restrictive.

Rather than put the referendum on the ballot, the council early last
year repealed the city's marijuana regulations. City officials note
that with the regulations repealed, all marijuana dispensaries in San
Jose are technically illegal. The city has since focused enforcement
on collectives that have failed to pay the city's marijuana tax or are
located within 600 feet of a school.

A California Supreme Court ruling earlier this month confirmed cities'
rights to ban marijuana collectives altogether. The unanimous ruling
rejected activists' arguments that bans violate patients' rights under
the landmark 1996 Proposition 215, the Compassionate Use Act that
launched the state's 17year-old medical marijuana
experiment.

San Jose officials have not indicated plans to seek an outright ban,
as numerous other Bay Area cities have. But the ruling strengthens San
Jose's hand in pursuing regulations. City officials said they plan to
bring marijuana collective regulations and zoning before the council
in the fall.

In other matters, the council Tuesday voted 8- 3 to increase funding
for the legal defense of the city's pension reform efforts that voters
approved overwhelmingly in June. The vote raises the contract for the
law firm Meyers Nave by $ 900,000 to a total of $ 2.1 million. The
firm is handling the city's defense of Measure B, which city unions
have sued to block, because the city's in-house lawyers are affected
by the benefit changes and have a conflict of interest. City officials
said the increase in funding will come from additional tobacco
settlement funds received from the state.

The legal contract increase triggered more infighting on the council
over pension reform. Councilmen Ash Kalra, Xavier Campos and Kansen
Chu were opposed.

"I'd like to see those funds go toward services rather than an outside
law firm," Kalra said.

Reed, however, said $ 20 million in savings on retirement benefits is
anticipated in the upcoming budget.

"I look forward to hearing from Councilman Kalra how we're going to
get the $ 20 million," Councilman Sam Liccardo said. "I've not heard a
viable alternative."
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MAP posted-by: Matt