The impacts of a city ballot initiative that would tax and regulate marijuana are still unclear.
Measure M, a ballot initiative that will allow city officials to tax and regulate recreational and medicinal marijuana, passed Tuesday with about 80 percent of the vote. Measure M will implement a 10 percent gross receipts tax on all recreational use of marijuana and a 5 percent tax on medicinal use, down from the previous 6 percent.
Proposition 64, which passed in November 2016, legalized recreational marijuana in California but left regulation up to the state’s cities. The city of Los Angeles put Measure M, a plan for marijuana taxation and regulation, on the March 2017 ballot for the county’s municipal elections.
Measure M also will levy a 1 percent gross receipts tax on marijuana transportation, testing or research, and a 2 percent tax on marijuana cultivation, manufacturing, and other commercialization.
The measure allows the city to impose penalties and criminal fines to those who do not comply with regulations, including shutting off the water and power of businesses that break the law. The measure will give priority application processing to existing, legally operating marijuana dispensaries.
Many agree that Measure M is flexible enough to leave room for future adjustments as the city accommodates to Proposition 64.
Nothing about the measure is sacrosanct, said Jim Newton, a public policy lecturer. Newton also said he thinks the measure’s taxes will not have a large impact on the city’s economy, though that could change with time.
“The taxes are low, so I doubt it’ll make a large overall impact,” Newton said.
He added he thinks new businesses may encounter problems trying to open, because marijuana is still illegal under federal law.
“I don’t know how easy it would be to get a bank loan to open a marijuana shop, for example,” Newton said. “Any business on the zone between state and federal law is tough.”
Newton said implementing gross receipts taxes may put a burden on new businesses, because the city will tax their overall revenue instead of their net profits. For example, if a business makes $1.1 million a year, but has $1 million in expenses, the city will tax based on the $1.1 gross revenue, he said.
Newton added he thinks Los Angeles is an ideal place to collect tax revenue from recreational marijuana because many residents already use medical marijuana.
Tarn Sidhu, a fourth-year geography student who uses medical marijuana, said he has no plans to stop visiting medical dispensaries because Measure M’s tax rate for medical marijuana is lower.
“Marijuana is not crazy expensive for the tax to really matter (for the city),” Sidhu said. “Someone spending another $5 a week on their medicine isn’t a lot.”
He added he thinks the tax revenue from the measure should be used to fund care for medical marijuana users.
“I think the money should go toward funding to help people with problems that marijuana is used for,” said Sidhu.
Chris Harris, a third-year electrical engineering student, also said he thinks recreational marijuana should be taxed.
“From a financial standpoint, it makes sense,” Harris said. “Why not tax it like any other commodity?”
He added he thinks the taxes will provide a good source of revenue for Los Angeles and the legalization of marijuana will also save the city money on prosecuting users.