By Marcus Wohlsen
Associated Press
OAKLAND, Calif. — Californians may have rejected legalizing recreational marijuana, but voters across the state are more than ready to reap revenue from the state’s largest cash crop.
On Election Day, all 10 cities with local measures on their ballots approved new or higher taxes on marijuana sales that put the need for cash above the stigma of a federally banned drug.
The same was true in Colorado, where medical marijuana was approved in 2000. Nine municipalities approved higher sales taxes on medical marijuana products this year. So far, no Colorado town with a marijuana tax question on the ballots has rejected it.
The embrace of pot as a legitimate revenue stream signals the continued mainstreaming of marijuana in both states, despite the defeat of California’s Proposition 19.
“As part of treating this business like any other business in the city, we need to update our business operation tax to include them,” said Amy Williams, a spokeswoman for the city of Sacramento, where voters approved a 4 percent tax on medical pot.
Other cities that approved special marijuana taxes, including San Jose, Long Beach and Oakland, have struggled with recession-driven deficits, and all decided to look to marijuana to help bridge the gap.
Some cities put measures on the ballot to prepare themselves in case voters approved Proposition 19, which included a provision that would have legalized small-scale cultivation of marijuana across the state.
Long Beach’s measure, which passed overwhelmingly, would have imposed a 15 percent tax on businesses that sold marijuana for recreational use.
Voters in Stockton imposed a 4 percent tax on medical marijuana dispensaries. The same measure would have levied a 10 percent tax on non medical marijuana businesses.
Oakland voters led the way last year by passing the country’s first special tax on medical marijuana, an extra $18 for every $1,000 in sales on top of the city’s regular sales tax of 9.75 percent. In the most recent election, voters raised that tax rate to $50 for every $1,000.
And the city is poised to lead again in pushing the limits of government-sanctioned pot sales. Later this month, the city will begin taking applications for permits to run four industrial-scale medical marijuana growing operations.
Nearly 300 groups and individuals have registered their interest in applying for the permits. Each would have to pay a $5,000 nonrefundable fee to apply. Recipients of the permits would be required to pay an annual fee of $211,000.
In San Jose, some dispensary operators are frustrated by what they see as contradictory messages from city government.
On the one hand, the City Council has been working to reach an agreement on regulating as many as 80 pot retailers that have sprung up in the past two years. At the same time, county narcotics officers have led raids on dispensaries that investigators say are using medical marijuana as a pretense to sell drugs.
Yet how much revenue cities will really see from marijuana remains difficult to predict. Dispensaries have always been required to pay state sales tax like any other business, but many would rather risk state penalties for not paying taxes than leave a paper trail for federal authorities.
While the medical marijuana business has made some entrepreneurs wealthy, taxes on the drug are not universally viewed as a salvation for ailing local economies.
In Sacramento, officials estimated that taxes on dispensaries would realistically bring in about $500,000 per year. A financial review earlier this year projected deficits topping $50 million annually in coming years.
“Of course we need whatever we can get, but it’s not going to make a huge dent in our problem,” Williams said.
Though California’s Proposition 19 was rejected, many cities had previously approved taxes on legalized medical marijuana to help ease deficits. Oakland led the way last year.
Patrons of stores that sell smoking paraphernalia were interested in the vote in California on legalizing recreational marijuana. Some cities also had a keen interest and took steps to gain taxes, had recreational use been OK’d.