Pubdate: Wed, 10 Dec 2014
Source: Los Angeles Times (CA)
Copyright: 2014 Los Angeles Times
Author: Emily Alpert Reyes


Two council members want L.A. to stop profiting from stores that 
don't meet city requirements.

Two Los Angeles lawmakers are pushing to end a controversial city 
practice of issuing tax registration certificates to medical 
marijuana shops without determining if they are allowed to operate 
under a voter-approved crackdown on the businesses.

Councilwoman Nury Martinez and other critics complain that pot shops 
that do not comply with city requirements have used the documents to 
persuade customers and landlords that they are lawful. And the city 
is guilty of "the biggest hypocrisy" by reaping tax income from 
businesses that f lout the law, the San Fernando Valley lawmaker said.

"While our city continues to profit from these illegal businesses, my 
residents and my neighborhoods and my district are paying the price," 
Martinez told City Council colleagues Tuesday, as she announced a 
proposal to halt the issuance of the tax certificates to shops that 
don't meet requirements.

Councilman Jose Huizar, who coauthored the proposal, said it can take 
months to investigate and shut down an unlawful pot shop once it is opened.

Under their proposal, Martinez and Huizar want the city to create a 
verification process to check which shops comply with city rules - 
and prevent shops that don't from obtaining the certificates.

"This is going to be a much easier way to stop it at the front end," 
Huizar said.

Under Proposition D, which was approved by city voters last year, 
medical marijuana businesses and the landlords who lease space to 
them can be prosecuted if the shops don't meet several requirements, 
including being registered with the city in the past and operating a 
specified distance from public parks and schools.

When the law was passed, city officials estimated that fewer than 140 
medical marijuana businesses - a fraction of the estimated total - 
would qualify to continue operating.

But this year, more than 450 medical marijuana shops renewed their 
paperwork to pay business taxes, according to city officials. 
Hundreds more remained actively registered with the city.

L.A. reaped roughly $2.1 million from medical marijuana businesses 
that renewed their tax paperwork this year, the Office of Finance 
said earlier this year.

At a June hearing, a city finance official told lawmakers that city 
workers don't generally consider the legality of a business when it 
registers to pay taxes.

Bemused, Councilman Mike Bonin asked if someone could register to pay 
taxes for selling whale meat, heroin or Cuban cigars.

Yamileth Bolanos, president and founder of the Greater Los Angeles 
Collective Alliance, a trade organization for medical cannabis 
providers, said it was "ridiculous" for the city to issue tax 
documents to shops that don't meet Proposition D's requirements.

It's especially frustrating for shops that follow the rules, she said.

"When we're trying to run the way that the city wants us to run, and 
someone else gets a [business tax registration certificate] and opens 
up across the street and they don't give a damn, it gives those of us 
that are trying to do it correctly and legally a bad name," Bolanos said.

City Atty. Mike Feuer, whose office says it has shut down more than 
400 marijuana businesses since the law went into effect, has stressed 
that a tax registration certificate is not a city permit - a point 
underscored in writing on the document. Martinez and Huizar want to 
make that even clearer, possibly with bigger type.

The city has to tread carefully in the face of federal law that 
outlaws marijuana sales, said David Welch, an attorney who represents 
medical marijuana businesses.

Los Angeles could face a thorny legal situation if it becomes "an 
active participant" in deciding which businesses qualify under city 
rules, he said.

That could make it appear that the city is promoting violations of 
federal law, Welch said.

Martinez pointed out that the city has a list of shops that meet some 
Proposition D requirements, saying that it could be used to help 
verify which businesses can be registered.

But that list was removed from a city website months ago "to 
eliminate any confusion" about what it meant, said Feuer spokesman Rob Wilcox.

Feuer's office has said that only a court can decide if a medical 
marijuana business is complying with all city rules.

To some neighbors annoyed about new, unallowed shops that continue to 
crop up, registering such businesses to pay city taxes makes no sense.

"It goes against everything that the voters voted for," said Howard 
Benjamin, vice president of the Van Nuys Neighborhood Council.
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MAP posted-by: Jay Bergstrom