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City May Ask Voters to Approve Taxing, Not the Sale of Medical Marijuana, but the Cultivation

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Photo by mares8 via LAist Featured Photos on Flickr

Photo by mares8 via LAist Featured Photos on Flickr
Along with her proposal to tax oil drilling in Los Angeles, Councilmember Janice Hahn last week submitted a motion to tax the cultivation of medical marijuana. It's in an effort to help bring in revenue to the city, which currently is facing a budget crisis.

"During this time of economic distress where the City of Los Angles is facing a fiscal deficit of hundreds of millions of dollars and the City is preparing multi-year budget documents, there need to be creative ways of capturing revenues generated from certain services provided within our City borders," she wrote in the motion. "We need to concentrate these efforts on building permanent revenue streams that will help the City provide services to the public."

Her motion is two-fold: prepare a city ballot initiative for a 2011 election and for budget officials to evaluate the impact of the tax, if the public approves it, on the budget.

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Although the State Board of Equalization allows dispensaries to obtain seller's permits and for California to collect sales tax on medical marijuana sales, some "concerns have been raised about the legality of sales and business activity as the basis for a tax," says Hahn. "Similar concerns have been raised about taxing membership and operations."

Her solution? Cultivation. "A tax on the cultivation of medical marijuana does not trigger concerns associated with sales activity, confidentiality of members, or the ability to audit the taxpayer," Hahn explains. "A cultivation tax does not involve analysis or measure of sales activity, but rather the activity of the grower."

The motion was sent to a City Council committee.

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