Pubdate: Sat, 5 Mar 2011
Source: Los Angeles Times (CA)
Page: Front Page, continued on page A12 and A13
Copyright: 2011 Los Angeles Times
Contact:  http://www.latimes.com/
Details: http://www.mapinc.org/media/248
Author: John Hoeffel
Referenced: Editorial: No on Measure M 
http://www.mapinc.org/drugnews/v11/n113/a08.html
Referenced: Editorial: Resist the Temptation to Punish Two Unpopular 
Businesses http://www.mapinc.org/drugnews/v11/n115/a09.html
Bookmark: http://www.drugsense.org/cms/geoview/n-us-ca (California)

CLINICS TURN AGAINST POT TAX

Marijuana Activists, Angry Over L.A.'s Attempts to Limit 
Dispensaries, Are Opposing Measure M.

When Oakland's voters slapped the nation's first tax on marijuana 
sales a year and a half ago, the city's dispensaries backed the 
ballot measure, pushing it as a way to be seen as legitimate businesses.

And when voters in 10 California cities decided on pot taxes in 
November, the elections were largely uncontroversial. The taxes all 
passed by more than two-thirds.

But in Los Angeles, where voters decide Tuesday whether to create a 
pot tax, medical marijuana activists who once urged City Hall to tax 
and regulate them are hoping to defeat the proposal, angered by the 
council's decision to limit the number of dispensaries to 100 and 
choose them by lottery.

"The city has done nothing for the patients, and I don't see why the 
patients have to pay a sin tax. We're not a topless bar," said 
Yamileth Bolanos, a dispensary operator who leads a group of the 
city's oldest collectives. "The city hasn't even been able to enact 
an ordinance that creates safe access."

Measure M would require the city's dispensaries to pay a 5% business 
tax on gross receipts, which is 10 times more than the city's highest 
tax. Councilwoman Janice Hahn, who proposed the tax, estimated that 
it would raise at least $10 million. The city faces a $54-million 
budget shortfall through June.

"It seemed to me it was a way to bring more revenue to the city to 
keep us from laying off any more city workers, or firefighters, or 
cops," Hahn said. "And I think it's a fairness issue. I think they 
should pay their fair share of taxes to the city. We are expending 
enormous resources to pass an ordinance that allows them to operate 
in the city of Los Angeles. I mean, we've spent building and safety 
time, city attorney time, city clerk time. We're going to be spending 
code enforcement time."

The no campaign is low-key and low-budget, targeted at urging the 
city's medical marijuana consumers - enough to support hundreds of 
retail stores - to show up to defeat what opponents disparage as an 
unfair tax on a medicine. But there are also a few heavyweight 
opponents, including Police Chief Charlie Beck, Sheriff Lee Baca, 
Dist. Atty. Steve Cooley and the city's two biggest daily newspapers.

On the yes side, the campaign is run by an Oakland political 
consulting firm that worked on last year's marijuana legalization 
campaign. The campaign is backed by some of the city's public 
employee unions, but no dispensary has publicly endorsed it. "Some 
are vehemently against, some are sitting on the side, and I would say 
a few, but not many, recognize this is how business works and will 
normalize their dealings with the city," said Andre Charles, a 
consultant with The Next Generation.

The debate centers on whether the tax is fair or even legal.

Under the city's medical marijuana ordinance, dispensaries are 
required to operate as nonprofits, though city officials believe many 
do not. The city attorney's office has told the council that the tax 
measure violates the city's municipal code, which exempts charitable 
organizations from business taxes.

This is the main reason the Los Angeles Times and the Daily News of 
Los Angeles editorial boards gave a thumbs-down to the initiative.

But many dispensaries that have business licenses from the city 
Office of Finance are already paying city taxes. Antoinette 
Christovale, the general manager, said her office does not track how 
many dispensaries there are in the city or how much money is 
collected from them.

Dispensaries cannot receive tax-exempt status from the Internal 
Revenue Service because the sale of marijuana is illegal under 
federal law. That means they cannot receive exemptions from the state 
or the city, which rely on the IRS determination.

William W. Carter, chief deputy city attorney, said that his office 
had to stick to the fact that Los Angeles' laws bar taxes on 
charitable organizations, even if they are not tax-exempt. "We 
interpret the law based on what it says in black and white, not on 
how other departments have applied it," he said. The city attorney's 
office, as the lawyers for the City Council, has not taken a position 
on the measure.

Councilman Bernard C. Parks, who opposes the measure, believes 
dispensaries would sue to overturn the tax. "If it passes, you'll be 
saying a year from now, 'Where's the tax money?' " he said. He also 
believes it would require the Office of Finance to add a layer of 
bureaucracy. Christovale said her office has not studied what it 
might cost to collect the tax.

Beck, who as police chief typically tries to stay out of politics, 
said he opposes the measure because it undermines laws that allow 
marijuana to be distributed only as a medicine and only by 
nonprofits. "When we tax it, then we wink and nod toward the fact 
that it is not a medicine, it is a recreational drug," Beck said. "I 
think that it's a wrong position for the city to take. We're not 
taking the moral high road. It's like saying, 'Hey, let's tax 
prostitution because it's happening anyway.' "

Bolanos and other medical marijuana advocates also oppose the tax as 
too high for a medicine. What proponents call a fair share is nearly 
40 times as much as tobacco sellers and pharmacies pay. Dispensaries 
are also required to charge sales taxes, which are 9.75% in Los Angeles.

But Hahn said she settled on a 5% gross receipts tax because it is 
similar to what other California cities have imposed on the lucrative 
businesses, including Oakland, which tripled its tax to 5% in 
November. Oakland expects the tax to bring in $1.3 million this year, 
enough to hire seven police officers.

The potential for revenue has drawn support from unions such as 
United Firefighters of Los Angeles City and Service Employees 
International Union, Local 721, which represents about 11,000 city 
workers. "At the time of this financial crisis right now we need to 
find more ways to generate more revenues," said Bob Schoonover, Local 
721's president. "We're not really making a judgment call on this at 
all, but marijuana is being sold, so we just think they should pay 
their fair share of taxes, that's all."

SEIU 721 donated $5,000 to the yes campaign, the only reported 
contribution so far. The campaign still hopes to raise $5,000 more. 
The yes position will be on some slate mailers, and the campaign has 
a Facebook page and a website, yesonlameasurem.com.

The no campaign, which also has a website, notaxonmedicine.org, is 
largely the work of a few outspoken activists, including Bolanos and 
Richard Eastman, who credits pot with helping him to suppress his 
AIDS. "I don't believe my medicine is a sin," he said. "That's what 
they're trying to sell with this tax."

Bolanos has spent about $800 raised from supporters and Eastman about 
$500, mostly on literature ("Get the greed out of the weed!") aimed 
at dispensary customers who would pay for the tax. "I'm going out to 
as many dispensaries as I can," Eastman said. "I'm a working wrecking crew."  
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MAP posted-by: Richard Lake