Pubdate: Wed, 23 Sep 2015
Source: Los Angeles Times (CA)
Copyright: 2015 Los Angeles Times
Author: Emily Alpert-Reyes


Council Examines Charges That Outlets Are Registering to Claim Legitimacy.

Even as Los Angeles tries to crack down on marijuana businesses, one 
arm of city government - its tax registration office - has continued 
to register pot shops that may not be allowed to operate under 
voter-approved regulations. Rick Loomis Los Angeles Times 
COUNCILWOMAN Nury Martinez wants officials to verify that shops 
comply with city rules before issuing certificates, but they say 
that's not doable.

The practice has alarmed some city lawmakers, who complain that 
marijuana shops not complying with the rules have used business tax 
registration documents to convince customers and landlords that they 
are operating legally.

Late last year, Councilwoman Nury Martinez called for the city to 
stop issuing tax certificates to shops that are not in compliance 
with the law, arguing that it was hypocritical for the city to reap 
revenue from illegal businesses.

At a City Council committee meeting Monday, lawmakers stopped short 
of endorsing Martinez's proposal after finance department officials 
said they had no authority to investigate the legitimacy of 
businesses registering for tax certificates.

Instead, members of the Budget and Finance Committee asked city 
officials to report on other possible actions, including requiring 
pot shops to declare in writing under penalty of perjury that they 
comply with the voter-imposed requirements before registering to pay taxes.

Under Proposition D, which voters passed two years ago, medical 
marijuana businesses and the landlords who lease 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 mandated 
distance from parks and schools.

When voters passed the law two years ago, city officials estimated 
that fewer than 140 of the businesses would qualify to continue operating.

But far more have continued to register to pay business taxes to the 
city: City officials said nearly 450 marijuana shops filed renewal 
paperwork this year.

Hundreds more - a total of more than 1,100 marijuana businesses - 
remain registered with the city, though they may have closed without 
telling the finance office. And others may be operating but have 
never registered to pay taxes.

More than $4 million in business taxes has been collected from 
marijuana shops so far this year, according to finance officials.

Last year, Martinez said she wanted the city to help finance 
officials verify which shops comply with city rules and stop the rest 
from obtaining certificates.

But at the Monday hearing, assistant finance office director Ed 
Cabrera said his department is not authorized to investigate whether 
a business is legal. When a business registers, he said, "they're 
simply taking the taxpayer ... at face value."

Council members said that if a marijuana shop had to attest that it 
complied with Proposition D before registering, fewer of the shops 
that are operating illegally might try to register.

In addition to asking such shops to certify they meet city 
requirements, Councilman Paul Krekorian asked finance officials to 
devise ways to alter the tax certificates to make it clear that they 
do not mean a marijuana business complies with city rules.

He and other lawmakers also said finance officials should regularly 
send city prosecutors and police upto-date information about which 
pot shops have tried to register to help them track down any 
businesses that violate the city rules.

City lawyers and finance officials are supposed to report to the 
council budget committee on possible rewording of the tax 
certificates and other suggested changes in two weeks. They face some 
deadline pressure: Cabrera said the city will soon start printing the 
tax certificate renewal paperwork that businesses will file next year.
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MAP posted-by: Jay Bergstrom