San Diego will become one of several California counties to pass a tax on marijuana businesses if local voters approve a ballot measure that is up for discussion on the November ballot proposed by Councilman Mark Kersey, unveiled in mid-June.
Kersey said the tax would help cover the costs of code enforcement officers, police and other municipal workers who regulate marijuana businesses. The tax would start at 8 percent of gross receipts and could increase to 15 percent with approval from the City Council. Advocates and owners of marijuana businesses did not immediately reject the proposed tax, but some warned that too much taxation could increase prices of regulated marijuana and provide a shot in the arm for the black market.
Opponents of legal marijuana were the most outspoken against Kersey’s proposal, citing concerns about the black market and arguing that local taxes legitimizes a drug that remains illegal under federal law. In addition to Kersey’s tax on marijuana businesses, San Diego voters will also likely face a statewide ballot measure which would legalize recreational use of marijuana in California. State voters earlier rejected a recreational use ballot measure, but now the issue is coming back on the agenda.
Kersey states that his tax would get ahead of the recreational use ballot measure by establishing local taxes on regulated businesses that will become necessary if voters decide to pass the Adult Use of Marijuana Act. Crucially, AUMA would end taxation on medical uses of the drug. If it passes, Kersey’s proposed tax would only apply to recreational use, and if it fails, it would apply only to medical use. AUMA would apply a 15 percent state tax on retail sales of recreational marijuana, so if both measures pass, recreational marijuana users in San Diego would pay a combined state and local tax of between 23 and 30 percent.
City Council President Sherri Lightner agreed that San Diego should follow the example set by many other California cities and pass a tax on legal marijuana businesses in order to generate revenue for public safety and infrastructure.
Cities that have already past local marijuana taxes include Los Angeles, San Jose, Oakland, Sacramento, Long Beach, Berkeley, Palm Springs and several smaller cities, with tax rates ranging between 6 and 15 percent. Between 2011 and 2015, San Jose’s marijuana tax generated $17 million in revenue.
Dispensary owners are concerned that higher taxes will encourage customers to buy on the black market. But Lance Rogers, an attorney who represents dispensary owners, says that there are a lot of good uses for the extra tax dollars and voters should get to decide. Because the revenue from the marijuana tax would be added to the city’s general fund and not set aside for a specific purpose, only a simple majority of 50 percent is needed for it to pass. Scott Chipman, leader of San Diegans for Safe Neighborhoods, is opposed to Kersey’s tax and marijuana legalization, and argues that public safety, not tax collection, should be the city’s main concern.
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