Pubdate: Sun, 19 Jun 2016
Source: San Diego Union Tribune (CA)
Copyright: 2016 Union-Tribune Publishing Co.
Note: Seldom prints LTEs from outside it's circulation area.
Author: David Garrick


San Diego would join several other large California cities that 
impose local taxes on marijuana businesses if voters approve a 
proposed November ballot measure that Councilman Mark Kersey will 
unveil on Monday.

Kersey said the tax, which would start at 8 percent of gross receipts 
and could rise to 15 percent at council discretion, would help cover 
costs for code enforcement officers, police and other city workers 
who monitor and regulate marijuana businesses.

Marijuana advocates and local proprietors didn't immediately reject 
the idea, but warned that excessive taxation of legal marijuana would 
inflate prices and could help foster a more robust black market for the drug.

Opponents of legalized marijuana expressed strong opposition to the 
proposal, citing similar concerns about a larger black market and 
contending that the government taxing marijuana further legitimizes a 
harmful drug that remains illegal under federal law.

Kersey's proposal comes with Californians facing a likely November 
ballot measure that would legalize recreational use of marijuana in 
addition to medical use, which state voters made legal in 1996.

"With the whole landscape changing, now is probably a good time to 
have this conversation," Kersey said. "Legalizing recreational use 
will increase demand, so I think it's likely you'll also see an 
increased demand for these kinds of city resources to monitor and 
regulate this industry."

Council President Sherri Lightner agreed.

"Many other California cities are adopting similar taxes on the sale 
of cannabis in anticipation of the use of recreational marijuana 
being approved statewide by voters in November," she said. "I believe 
this is a common sense proposal that will benefit San Diego by 
generating additional tax revenue that can be used for major city 
needs such as public safety and infrastructure."

If California's recreational marijuana ballot measure passes, it 
would end taxation on medical use of the drug.

Kersey's proposal would therefore apply to recreational use only, if 
the state measure passes. If the state measure fails, Kersey's 
proposal would apply to medical uses of marijuana.

Other cities that have already passed local marijuana taxes include 
Los Angeles, San Jose, Oakland, Sacramento, Long Beach, Berkeley, 
Palm Springs and several smaller cities. San Jose's tax generated $17 
million between 2011 and 2015. San Diego would be the first city in 
San Diego County to take this step.

The taxes elsewhere range from 6 percent to 15 percent. They are on 
top of traditional California sales taxes that legal medical 
marijuana businesses have had to pay since 2001, which is 8 percent 
in the city of San Diego.

The statewide recreational marijuana measure, known as the Adult Use 
of Marijuana Act, would also impose a 15 percent state tax on retail 
sales of recreational marijuana.

So if voters approve both the state and local measures, marijuana 
sales would be subject to a 31 percent tax surcharge at legal 
recreational dispensaries in the city of San Diego.

That number has raised some eyebrows among the United Medical 
Marijuana Coalition, which includes the owners of many of the 14 
legal dispensaries approved by the city.

"The coalition is currently extremely concerned about the pressure 
black-market dispensaries and deliveries are putting on city-licensed 
storefront cooperatives that are abiding by all regulations and 
bearing the expense that comes with it," said Rachel Laing, a 
spokeswoman for the group. "The danger is that adding double-digit 
taxes could further advantage the black-market operators - driving 
the legal, tax-paying providers out of business. We'll be advocating 
for an approach that addresses those concerns."

Laing said, however, that the group is optimistic that Kersey 
understands their concerns and will make appropriate adjustments - 
such as a lower tax rate.

Lance Rogers, an attorney who has represented local dispensary 
owners, said his position would depend on how the city plans to spend 
the new revenue.

"I can see a lot of good uses for these tax dollars, perhaps 
promoting cannabis tourism in San Diego or addressing substance abuse 
issues for people addicted to marijuana or who don't consume it 
responsibly," he said.

Scott Chipman, leader of the anti-marijuana group San Diegans for 
Safe Neighborhoods, said it would be a mistake for the city to move 
forward with a local tax.

"We're 100 percent opposed to anything that represents legalization 
of marijuana," Chipman said. "The number one effort by all elected 
officials should be to defeat legalization and educate the public on 
the harms. The number one role of government is public safety, not 
tax collection."

Proponents of the statewide recreational marijuana measure have 
submitted signatures, which must be verified in the coming weeks 
before it officially qualifies for the ballot.
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MAP posted-by: Jay Bergstrom