LA City Council to Consider Taxing Medical Marijuana

The Los Angeles City Council will consider today putting a measure on the March 2011 ballot to tax medical marijuana.

Councilwoman Janice Hahn sought to establish a tax of $50 per $1,000 of "cash and in-kind contributions, reimbursements, and reasonable compensation provided by members of medical marijuana collectives."

She estimated the proposed tax would add $3 million to $5 million a year to the city's coffers.

Last week, however, several of the council's legal and financial advisers questioned whether the city had legal standing to impose such a tax.

Senior Assistant City Attorney Pete Echeverria testified that "it's (the City Attorney's Office's) position that the city should not allow and tax marijuana sales, which would basically amount to a sanctioning of illegal activity."

Larry Manocchio, the city's principal tax compliance officer, said medical marijuana collectives are classified as nonprofit organizations and cannot be taxed.

Hahn disputed the notion that the city would be taxing profits from the sale of medical marijuana. She said the goal is to tax the amount that patients give medical marijuana operators to "reimburse" them for the cost of hiring workers, rent, utilities, and other expenses.  Several other cities are doing the same, Hahn said. In San Jose and La Puente, the tax is $100; Oakland and Richmond, $50, Sacramento, $40; and Berkeley, $25. She added that Long Beach is considering a tax of $50.

The council is also scheduled today to consider putting separate measures on the March 2011 ballot that would impose an excise tax on oil producers in Los Angeles and establish funding requirements for the city's reserve fund.

Another proposed initiative expected to be approved for the ballot today would amend the city Charter to guarantee that libraries receive a larger share of the city's property tax revenue for their annual operating budget.

Currently, the Charter dictates that the city's Library Department receive 0.0175 percent of the assessed value of all property that is assessed for city taxes. The council wants to ask voters to boost that portion gradually over the next three years, until it reaches 0.03 percent.

The Library Department suffered some of the deepest budget cuts this fiscal year. Dozens of librarians and other staffers were laid off, and service was reduced to five days a week from six. The proposed ballot measure could boost the department's budget by about $50 million a year. City Librarian Martin Gomez told the council last week that the cash would allow his department to begin rehiring staff to become fully operational again.

"(The proposed ballot measure) will bring us back to 2009-2010 (budget) levels, which essentially is all libraries open six days a week, four evenings per week, and nine locations open on Sunday across the city," he said.