Pubdate: Tue, 16 Dec 2014
Source: Los Angeles Times (CA)
Copyright: 2014 Los Angeles Times
Contact:  http://www.latimes.com/
Details: http://www.mapinc.org/media/248

MIXED MESSAGES ON POT SHOPS

Despite 2013's Measure D, under which only about 135 existing medical 
marijuana dispensaries have permission to stay open in Los Angeles, 
the city has continued to issue tax registration certificates to new 
pot shops and keeps collecting business taxes from some 450 
dispensaries. Talk about mixed messages. While the city attorney and 
Police Department are attempting to close rogue pot shops, the Office 
of Finance keeps cranking out new tax certificates for those same dispensaries.

Even though the certificate is not a permit - and it says so right on 
the document - it sure feels like one; often, for instance, it can 
convince a landlord that the dispensary is OK with City Hall. The 
city collected $3.6 million in business taxes this year from 
dispensaries, whether they were allowed to operate or not. What's 
more, the finance department has only recently begun sharing the list 
of tax-paying pot shops with the Police Department and the city 
attorney, after City Council members questioned why nobody was using 
the tax rolls to crack down on illicit shops.

Last week, council members Nury Martinez and Jose Huizar called on 
the city to stop issuing tax certificates to dispensaries that are 
not allowed under Measure D. Martinez said the city was engaging in 
"hypocrisy" by blindly collecting tax revenue from illicit business. 
She's right. Furthermore, the practice creates a moral hazard in 
which the city has a disincentive to shut the businesses down.

The city's conflicting policies should end. The only question is how. 
Medical marijuana regulation in Los Angeles has been a mine field. In 
recent years the city has adopted various schemes, including an 
outright ban, to regulate dispensaries, only to be confronted with a 
referendum, lawsuits and conflicting court rulings.

Measure D was an imperfect attempt to cap the number of pot shops by 
granting limited immunity from prosecution to 135 dispensaries that 
had been previously approved and were not near schools and parks. It 
did not actually permit those dispensaries to operate - which legal 
experts have said the city cannot do as long as marijuana remains 
illegal under federal law; it merely said the city would not 
prosecute those 135 shops. So there is some concern now that the city 
could invite legal challenges if it actively determines which shops 
should or should not qualify to pay business taxes.

This is yet another conundrum caused by California's failure to adopt 
a comprehensive system for regulating medical marijuana. Earlier this 
year the Legislature shelved the best proposal yet to license 
individuals who grow, process, transport and sell medicinal pot. 
While the state dawdles over commonsense rules for the industry, 
cities such as Los Angeles are left to maneuver the mine field as 
best they can with the tools they have.
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MAP posted-by: Jay Bergstrom