In February, the City of Los Angeles approved a $2 billion housing project that would be completed over the next decade, and one of the funding options could be a 15 percent tax on medical marijuana.
Homelessness in Los Angeles has increased 12 percent in the last two years, with an estimated 254,000 people in need of housing, and local legislatures are under pressure to create solutions. Mayor Eric Garcetti even made an unsuccessful attempt to declare a citywide state of emergency in November 2015.
The City Council realizes that the $2 billion program will require new sources of tax revenue to fund the ambitious project. Chief Administrative Officer Miguel Santana told KPCC,
“Even as our economy improves, we do not anticipate to have an additional $1.78 billion over the next 10 years to dedicate for this purpose.”
City officials have narrowed down their list of possible tax options to cover the cost, but a medical marijuana tax would possibly bring in $17 million in revenue. If they decide in favor of a medical marijuana tax, it could be proposed to voters on the November ballot. Other cities in California that already tax medical marijuana include Riverside County, Cathedral City and Desert Hot Springs.
In order for a medical marijuana tax to be successful, the City Council needs to convince voters that this tax is the best way of funding the new housing project. Other options on their list include taxes on real estate sales and zoning taxes, which could bring in hundreds of millions of dollars, making a medical marijuana tax seem paltry by comparison.
There is also the issue of taxing medicine. California’s medical marijuana program, while notoriously flexible, does not include recreational use, and therefore the tax would be targeting patients rather than cannabis enthusiasts. The price increase could also mean that patients will buy from illegal sources in order to have access to affordable medical marijuana.
California already has plans to tax marijuana, should it become legal. The leading ballot initiative in California is the Adult Use of Marijuana Act, which is expected to receive enough signatures to appear on the November ballot and has strong support from the governor’s office. The program outlines how recreational marijuana would be taxed, and how medical marijuana patients would be exempt from state taxes.