Oakland Approves Marijuana Tax
On Tuesday Oakland voters overwhelmingly supported a measure to increase the tax on medical marijuana. In fact, a full 80% of voters approved the bill. According to MSNBC:
Scheduled to take effect on New Year’s Day, the measure created a special business tax rate for the pot clubs, which now pay the same $1.20 for every $1,000 in gross sales applied to all retail businesses. The new rate will be $18.
Oakland’s auditor estimates that based on annual sales of $17.5 million for the four clubs, it will generate an estimated $294,000 for city coffers in its first year.
Pot club owners, who openly sell pot over the counter under the 1996 state ballot measure that legalized medical marijuana use in California, proposed Measure F as a way to further legitimize their establishments.
“It’s good business and good for the community,” said Richard Lee, who owns the Coffee Shop SR-71 dispensary and Oaksterdam University, a trade school for budding dispensary workers.
Oakland’s vote comes well before the state legislature’s vote on target=”_blank”>AB 390, which would legalize marijuana for recreational purposes. Supporters estimate that marijuana legalization would generate more than $1.3 billion in tax revenue for the State of California. The bill was introduced in the state assembly before the government started handing out IOU’s to state employees and contractors. However, the timing obviously couldn’t be more appropriate. Los Angeles is prepared to become the next city on California to impose a city-level tax.
Yesterday’s discussion of the Oakland tax on CNN was very illustrative. Most of the callers said that they supported the tax. One caller said that she was in favor of medical marijuana but opposed the tax because she felt it would be a precedent for the government to start taxing other medications. I think that’s a legitimate concern – but I find it highly unlikely. The marijuana tax is more akin to a “sin tax,” such as the tax on tobacco and alcohol. However, the caller does provide an interesting concern. What’s your take on it?
A city tax on marijuana is not a “sin tax” but a tax on medicine….If it was legal for ANYONE to go in and buy it not just those with a prescription then it could be classed like liquour and cigarette taxes as sin taxes…..
And what happens if the medical marijuana becomes eligable for purchase using Insurance and Medicare/Medicaid…or MediCal in this case….will those paying out of pocket have to subsidise those who have insurance??? You can bet Medicare/Medicaid will be deemed exempt from the tax or a law quickly passed to make them so.
Hey Roland, good points. The bill that the CA legislature is debating would let anyone over the age of 21 purchase marijuana from licensed dispensaries. So I think that it if perfectly analogous to alcohol and tobacco.
As for the question of Medicare/Medicaid, medical marijuana is already excluded from coverage. People pay out of pocket for it. But it still ends up saving some folks money because they can either reduce or stop taking other prescription meds. But, it’s a good question that you raise – one that I hadn’t really considered before.