The Los Angeles County Board of Supervisors on Wednesday voted to place a 10 percent business tax on cannabis on the November 2016 ballot.
The 3-2 vote follows intense lobbying by a broad coalition including the California Cannabis Industry Association (CCIA), Drug Policy Alliance (DPA) and Angeles Emeralds, and comes just two weeks after the Board voted to extend the County’s existing ban on cannabis cultivation and dispensaries for one full year.
If approved by the voters, revenues would be used to support homeless services in Los Angeles County. L.A.’s homeless population has been rising in recent years, and the proposed pot tax is part of a larger effort by city and county officials to put more money behind easing the problems, reports Abby Sewell at the Los Angeles Times.The proposal calls for a 10 percent tax on the gross receipts of businesses that produce or distribute marijuana and related products. It would apply to medical marijuana operations as well as the recreational marijuana industry if California voters decide to legalize it in November.
Public health and law enforcement officials expressed concerns that high taxation on the legal cannabis industry could drive consumers back to the black market. While the level of homelessness in the county is “dire,” according to a letter from L.A. County Sheriff Jim McDonnell, the Board of Supervisors should look at other measures than taxing marijuana.Actual collection of all that tax money could present potential security risks for county tax collectors, since marijuana businesses are forced to operate on cash by federal banking and conspiracy laws. L.A. County Treasurer-Tax Collector Joseph Kelly said his office might have to hire armored cars to pick up the loads of cash. County analysts estimate the measure, which would require a two-thirds majority vote to pass and thus has a steep path to success, would raise as much as $130 million annually to pay for mental health and substance abuse treatment, rental subsidies, emergency housing and other services for the homeless.
If the recreational legalization measure AUMA passes in November, L.A. County wouldn’t be able to begin collecting taxes on that industry until 2018. In the meantime, the county and cities within it will be setting up their own regulations on commercial cannabis operations.
More than 100 groups and individuals attended Wednesday’s Board Chamber to voice their support for the proposal, including representatives from CCIA.
“Today’s action proved that the Board of Supervisors are ready to explore a new path – a path to taxation and regulation of cannabis,” the CCIA opined in a Wednesday statement. “With Proposition 64 headed to the November ballot, the Board has signaled that they believe the adult use measure is likely to pass and that it’s time for the county to build a foundation that permits cannabis businesses to legally operate in the county.
“But, more work needs to be done,” the statement reads. “The Board must still vote to lift the ban on cultivation and dispensary operations and the voters must still approve the tax measure, which would take effect in January 2018.
“CCIA, DPA and Angeles Emeralds will continue to work with the Board to develop a reasonable taxation proposal and create a sensible, local regulatory structure that permits cannabis businesses to operate in a manner that protects the overall public health, safety and general welfare of the community,” the prepared statement reads.