Cannabis has the ability to raise millions annually from taxes, allowing states to increase funding to important community programs. Some of these programs include school, mental health, and homeless programs. Gangapreneur explains why California is proposing a 15 percent tax rate for medical cannabis.

MMJ Tax in LA Could Fund Homeless Services Plan

By TG Branfalt Jr.

Los Angeles, California city officials have proposed a 15 percent tax on medical marijuana sales and cultivation in the city in order to generate funds for homeless housing and services, according to a document outlining potential means.

If approved, the plan is estimated to raise $16.7 million annually based on current medical marijuana receipts, but that number could increase significantly if recreational marijuana were approved in the state and subjected to the same rate.

It is not unheard of for a municipality to levy additional taxes on top of the exiting 6 percent tax for medical marijuana gross receipts.  In 2014, Cathedral City and Desert Hot Springs, in Riverside County, each raised their tax to 15 percent and 10 percent, respectively. Santa Cruz city and county added a 4 percent retail tax and Shasta Lake City, in Shasta County, added a 6 percent sales tax.

Taxing medical cannabis is one of nine recommendations put forth by Chief Legislative Analyst Sharon Tso and City Administrative Officer Miguel Santana in the letter to members of the Homelessness and Poverty Committee.

Other options include a fee in lieu of inclusionary zoning, housing linkage fees, a real estate document fee, a bond worth up to $1.8 billion, a documentary transfer tax, a billboard tax, raising the sales and use tax 1 percent, and a parcel tax.

“There are multiple, anticipated initiatives involving marijuana on the Nov. 2016 ballot,” the authors noted as potential disadvantages for the plan “This may lead to confusion on behalf of the voting public.”

Whichever funding option is chosen by the committee will appear on the November ballot and would need to be approved by voters.