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Measure M - As In Marijuana - Not as Straightforward as It Seems

A tax on medical marijuana facilities might be good for city coffers, but the dispensaries' legal and not-for-profit ambiguity remain murky issues.

It seems counterintuitive and illogical to tax something that the federal government has long deemed illegal—and that’s essentially the rub regarding Measure M on the March 8 ballot.

The City of Los Angeles has proposed a 5 percent city tax on gross receipts received at medical marijuana collectives, which are legal in California but unlawful according to the federal government. If Measure M (see pdf file in photo section for details) is approved, medical marijuana dispensaries in the city would be required to pay a business tax of $50 for every $1,000 they receive in gross receipts during an annual accounting period.

The tax would be used to fund general municipal services such as police and fire protection, park and recreation facilities, and improvements across the city.

Arguments in favor of Measure M have been made by councilmembers Janice Hahn and Paul Koretz as well as the president of the United Firefighters of Los Angeles, Pat McOsker. Hahn reportedly estimated that the tax could raise $3 million to $5 million every year, which would help the city close its $319 million budget shortfall for fiscal 2011. Arguments against the measure have been made by councilmembers Jan Perry and Bernard C. Parks.

Opponents of the measure argue that it is not only wrongheaded but possibly illegal to tax a medicinal substance. Further, because medical marijuana collectives are supposed to be not-for-profit entities—not to be confused with "nonprofits" such as religious institutions and hospitals—it would be illegal as well as counterproductive to tax them.

Given “the illegality of the sale of marijuana and 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,” L.A. City Attorney Carmen A. Trutanich was quoted as saying in a Los Angeles Times editorialin December.

Perhaps the most compelling argument against the measure is that if the tax becomes a lucrative source of revenue, the city would want more of it. And that, opponents argue, would encourage the growth of medical marijuana dispensaries despite the fact that few neighborhoods want them in their backyards.

At the heart of the issue is the knotty question of whether medical marijuana facilities are for-profit businesses or not-forprofit collectives. “Back when Gov. Jerry Brown was California's attorney general, he issued an opinion that they can operate only as [not-for-profit] cooperatives or collectives in which patients or their 'primary caregivers' grow marijuana and supply other members,” the Los Angeles Times said in its recent opposition to Measure M.

“They can charge members for their cannabis, but only enough to cover their overhead costs," theTimes noted, adding that Brown's opinion hasn't been tested in court, however, and it's unknown how many medical marijuana facilities are operating as not-for-profits.

JEAN FLEMING March 05, 2011 at 09:15 PM
SOUNDS GOOD TO ME.
JEAN FLEMING March 05, 2011 at 09:31 PM
I VOTE A BIG YES ON "M" I AM AN OLDER LADY WHO HAS LIVED ABOUT 50 YEARS IN THE VALLEY. I AM A MEDICAL MARIJUANA USER. BUT I WOULD GO MUCH FURTHER AND LEGALIZE IT. LET'S STOP ALL THE NONSENSE REGARDING THE DANGERS OF MARIJUANA. IT'S NOT HARMFUL TO THE BODY UNLIKE LIQUER. THERE HAS BEEN PLENTY OF MEDICAL RESEARCH DONE ON POT TO PROVE IT'S MEDICAL USES. EVIDENTLY THE LAWS REGARDING THE USE OF MARIJUANA ARE INEFECTIVE .THESE LAWS HAVE CREATED THE SAME PROBLEMS THAT PROHIBITION OF ALCOHOL CAUSED. GANGS & BLOOD SHED. WE HAVE SUCH A BIG DEMAND FOR POT AND WE SHOULD REGULATE IT AS WE DO BOOZE AND TAX IT.
Doug March 05, 2011 at 10:47 PM
This is once again proof that we live in a corporatocracy as opposed to a democracy. Big corporations see no value in legalizing pot, if only to possibly (but most likely not) diminish the use of cigarettes and alcohol. To corporations, there's no money in pot, to cities and states, there is plenty of money to be made from pot, but who controls the government, the corporations. If we can't legalize pot, they should tax the hell out of cigarettes and alcohol, (yes even more than they do already) since so much damage is done by both. Like the old saying goes: No one ever started a fight at a Grateful Dead concert!!! And to add on to that, no one has ever died of pot cancer or pot poisoning!

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