Measure M Would Tax L.A.'s Nonprofit Medical Marijuana Dispensaries
Dispensaries are required by law to be nonprofits, and nonprofits can't be taxed. But few dispensaries have registered with the Internal Revenue Service as nonprofits because federal law also bans any sort of sale of marijuana.
But the legal mess didn't stop L.A. city councilmembers from placing Measure M on the March 8 ballot. A majority vote for the measure would force dispensaries to pay the city $50 for every $1,000 in gross receipts. The Los Angeles' City Attorney's office said the tax would have "little or no effect" because it is illegal as written.
In 1996, California passed Prop 215 that legalized the use of medical marijuana. In the years that followed and until today, the line of legality remains blurred. Local dispensaries are required to pay state sales tax.
Supporters argue that the would "protect vital services in Los Angeles" by raising $10 million of revenue each year to improve the city, including but not limited to park and recreational renovation or funds for the Fire Department. The tax is fair game in their eyes as it makes the dispensaries pay their share in city business taxes.
Opponents argue that Measure M is illegal because the local dispensaries, in theory, operate as nonprofit organizations. When asked about their opinions on Measure M, dispensaries in L.A. were quite elusive. Six dispensary owners did not provide any comment while two dispensaries offered negative opinions, but refused to have their names attached to the comments.
Allison B. Margolin, a criminal attorney and graduate from Columbia and Harvard Law, expressed her views with no fear. Having the reputation as "L.A.'s Dopest Attorney," Margolin has defended victims of undercover stings and dispensary operators arrested on erroneous grounds. She said Measure M may seem like a fair tax but it is "a difficult tax."
The L.A. County District Attorney's office claims that the selling of medical marijuana is illegal and the measure does not provide protections or clear guidelines for patients to understand how to deal within the legal realm. Margolin said it is nearly impossible for patients to work within a system that is structured to be impossible.
Not only does the Measure M not contain clear guidelines, but also would also raise the prices for the drug. If passed, Measure M would also lead to the city's reliance on tax revenue from the dispensaries making police operations less inclined to raid these establishments. This will invite more illegal, profit- seeking dispensaries and other kinds of crime, according to an L.A. Times editorial sharply criticzing the measure.
The issue comes full circle as the elephant in the room remains: Should we legalize marijuana?
Reach reporter Ujin Kim here.
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