Pubdate: Thu, 14 Jul 2016
Source: Los Angeles Times (CA)
Copyright: 2016 Los Angeles Times
Contact:  http://www.latimes.com/
Details: http://www.mapinc.org/media/248

TAX WEED FOR HOMELESSNESS?

L.A. County's Latest Plan - to Slap a Levy on Marijuana Sales - Comes 
With Several Drawbacks.

Running out of time and options to raise money to address the 
homelessness crisis, the Los Angeles County Board of Supervisors 
turned Tuesday to a new funding source: weed.

The supervisors agreed to seek voters' approval in November for a 
gross receipts tax of up to 10% on marijuana businesses. But it's far 
from clear that marijuana could - or should - be the pot of gold that 
county leaders are hoping for.

The board has spent the last several months trying to figure out a 
way to raise the $450 million a year that county officials estimate 
they need to provide outreach, mental health services, rental 
subsidies and housing for the homeless.

But proposal after proposal has been taken off the table - Gov. Jerry 
Brown wouldn't support changing state law to allow the county to 
consider a tax on millionaires, and supervisors balked at proposing 
sales or parcel tax hikes that would compete with ballot measures to 
raise taxes for public transportation and parks.

With the deadline looming to put something on the November ballot, 
the board voted to go with the pot tax - the most iffy proposal of them all.

The marijuana tax measure would be on the same ballot as Proposition 
64, which would make recreational use of marijuana legal under state 
law (it would remain verboten under federal statutes). The Adult Use 
of Marijuana Act is polling well so far - some 60% of likely voters 
have said cannabis should be legalized.

Still, there's no guarantee that Prop. 64 will pass. If it does and 
two-thirds of county voters also support the pot tax, the county 
could collect as much as $130 million a year. (That's significantly 
less than the local sales or parcel tax measures mulled by the county 
would have raised.) But if Prop. 64 fails and the county measure 
passes, the county's gross receipts tax would apply just to medical 
marijuana businesses, which would generate only about $13 million a 
year for homelessness services.

Supervisors are gambling on the arrival of legal pot. But even if 
voters support legalization, there's another reason to be concerned: 
Elected officials are increasingly counting on marijuana to fund 
public programs without considering the consequences of jacking up 
the price of legally purchased pot. Prop. 64 would slap a 15% excise 
tax on recreational marijuana.

That's in addition to state and local sales taxes, which range from 
7.5% to 10% depending on the county and city. The county's proposed 
tax of up to 10% on marijuana businesses' gross receipts - that is, 
the merchants' total revenue - would add another layer, as would any 
municipal taxes on marijuana sellers.

For example, the city of Los Angeles already imposes a 6% gross 
receipts tax on medical marijuana outlets.

Although such taxes would be paid by businesses, the cost would 
almost certainly be passed on to their customers.

This is exactly what a Blue Ribbon Commission on Marijuana Policy 
warned against last year: Don't treat legal marijuana as a cash cow. 
The panel, which was organized by Lt. Gov. Gavin Newsom and included 
legal, health and policy experts, said government agencies should be 
cautious in setting taxes so as not to undermine the goals of 
legalization. In particular, the commission noted, one of those goals 
is to reduce the power and profit of the violent drug cartels that 
have trafficked in illicit marijuana.

But heavy taxes could drive up the price of pot so much that 
customers and suppliers return to the black market.

At what point do all the proposed and existing taxes push the price 
of pot too high? It's too early to determine, and we reserve judgment 
on the marijuana tax because, frankly, homelessness is such a crisis 
that all options must be on table.

But here's a word of caution to county, state and local leaders: 
Legal marijuana should not be seen as the solution to your revenue problems.
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MAP posted-by: Jay Bergstrom