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Measure M Calls for Taxation on Medical Marijuana Dispensaries

Ujin Kim |
February 6, 2011 | 9:02 p.m. PST

Staff Reporter

 

 

Photo credit to Creative Commons.
Photo credit to Creative Commons.
On the upcoming March 2011 ballot, the Measure M is not a charter amendment, but a tax that calls for an estimated 5% tax or $50 for every $1,000 in gross receipts from the medical marijuana dispensaries in Los Angeles. Great, so this is a legal tax on illegal sales… huh?

If the tax receives its two-third of voters support, then Measure M would establish a City business tax rate for medical marijuana collectives of $50 per $1,000 of their gross receipts. These revenues will be then used to fund general City services including but not limited to police protection, park and recreational facilities, and general improvements for the City of Los Angeles.

In 1996, California passed Prop 215 that legalized the use of medical marijuana. In the years that followed, California began to manage the establishments of dispensaries such as the total number, location and hours of operation. Yet, a business tax rate for these collectives was not established.

Supporters for this upcoming tax on the March 8, 2011 ballot believe that this uniform tax rate will "protect vital services in Los Angeles" by raising $10 million of new revenue per year. Measure M will not only benefit the city, but also will make medical marijuana dispensaries pay their fair share in City taxes as a part of the Los Angeles community. 

However, the opposition toward Measure M brings up key arguments. Medical marijuana dispensaries operate as non-profit organizations, and it is illegal under city tax law to impose a business tax on non- profit organizations. The Los Angeles city attorney also claimed that, “based on the illegality of the sale of marijuana and on the exemption from business taxes or fees for organizations that operate on a not for profit basis, the proposed measure would be of little or no effect.” 

When asked about their opinions about Measure M, local dispensaries in Los Angeles said that "it is just another pain in the ass. Not only do medical patients have to pay more taxes [14.75% to be exact], but the city already regulates how we operate." Yet, the pressure in the successful passage of Measure M may not be fully comprehended or it may be as the city attorney stated that it is of "little or no effect" as one dispenser asked, "Miss, are you aware that it is Super Bowl Sunday."

We can only wait until after March 8, 2011 to know Measure M's fate, but it boils down to the question of legalizing marijuana. Can you legally tax something that is illegal? 

To reach reporter Ujin Kim, click here.

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