Pubdate: Tue, 15 Feb 2011
Source: Los Angeles Daily News (CA)
Copyright: 2011 Los Angeles Newspaper Group
Contact: http://www.dailynews.com/writealetter
Website: http://www.dailynews.com
Details: http://www.mapinc.org/media/246
Author: Kerry Cavanaugh
Bookmark: http://www.mapinc.org/find?115 (Cannabis - California)
Bookmark: http://www.mapinc.org/mmj.htm (Cannabis - Medicinal)

OBJECTIVE OF POT TAX MAY GO UP IN SMOKE

In the desperate search for revenue to save the city of Los Angeles 
from slashing services, could medical marijuana be the tax cash cow 
that keeps the city afloat?

The answer is hazy.

In fact, the Los Angeles leaders who put Measure M on the March 8 
ballot can't even agree on how much money a 5 percent medical 
marijuana tax will bring in - or if it will generate any money.

When the City Council voted last fall to put MeasureM on the ballot, 
officials estimated the tax could generate $3 million to $5 million a 
year. The Yes on Measure M campaign puts the revenue target at $10 
million. And Councilman Paul Koretz, who is leading the charge for 
the tax, figures L.A. could net $15 million a year.

Meanwhile, City Attorney Carmen Trutanich's office has questioned 
whether MeasureM will generate a dime for Angelenos. That's because 
the city of L.A. requires permitted dispensaries to be registered 
nonprofits, and nonprofits can be exempt from paying the city's gross 
receipts tax.

So far, at least two dispensaries have been granted a nonprofit 
exemption from the city's Department of Finance, which collects the 
business tax. It's hard to say how many more will qualify for a tax 
pass - the California Franchise Tax Board and the IRS don't put 
medical marijuana collectives on par with the charities and religious 
groups that typically claim tax-exempt status.

Koretz and other supporters of Measure M say they think dispensaries 
will pay the tax of $50 per $1,000 in gross receipts, no matter their 
nonprofit status. Just look at Oakland, they say.

Indeed, the city of Oakland currently levies a 1.8 percent tax on a 
handful of permitted dispensaries. The city expects to collect more 
than $400,000 for 2010. Residents voted to increase the tax to 5 
percent last November and Oakland estimates it will net $1.5 million for 2011.

But Oakland has a very different rapport with its dispensary 
community than L.A. does. It's a city, after all, with its own 
medical marijuana district called Oaksterdam, and city officials have 
sought to embrace, permit and expand a medical marijuana industry. 
Los Angeles, meanwhile, has been tied up in the courts for the last 
year fending off lawsuits from dozens of medical marijuana groups 
fighting the city's dispensary ordinance.

Oakland is really the only test case Angelenos have to assess the 
possible success of a pot tax. Last year, voters in half a dozen 
cities passed medicinal marijuna business taxes, but most haven't 
implemented the tax yet.

So, will a medical marijuana tax give L.A. the cash infusion it needs 
to reopen library on Mondays or restore Fire Department staffing or 
fill more potholes? Don't hold your breath.
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MAP posted-by: Jay Bergstrom