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A plan to tax recreational marijuana locally, should it be legalized by California voters in November, is now being taken off the shelf.
L.A. County Supervisor Sheila Kuehl, who proposed the 10 percent tax on the gross receipts of pot businesses, is now asking that her fellow leaders nix the idea.
Two weeks ago the Board of Supervisors approved placing the weed tax on the November ballot. But Kuehl says there's not enough support for it from some of the very groups it was intended to benefit — homeless services organizations.
"Since voting to place the business tax on the ballot, several homeless service organizations and advocacy groups have expressed ambivalence with this source of funding," she said in her proposal to spike the measure. "Since no ballot measure succeeds without a united effort, the Board has listened closely to this expression of public concern."
County leaders have for months been searching for a magic bullet to help solve L.A.'s growing homeless crisis, which has seen a 20 percent annual increase in the so-called "visibly homeless." Besides the marijuana tax, other ideas, including a so-called "millionaire's tax," also have been scrapped. The board has approved $100 million in annual spending on the problem but wants to spend hundreds of millions more. And in the city of Los Angeles, voters will be asked in November to approve a homeless bond measure worth $1.2 billion.
In her proposal to rescind the marijuana tax, Kuehl noted that the measure would join a crowded November ballot already jammed with 17 state propositions — including the Adult Use of Marijuana Act (Proposition 64).
The weed tax idea is facing other hurdles, too.
As we have previously reported, the board outlawed medical marijuana dispensaries in unincorporated parts of the county. In other words, the board has made medical pot illegal in the jurisdictions where it has the power to do so. In March, the body voted unanimously to double down on efforts to shut down illegal pot shops in those areas.
Looking to marijuana businesses as a savior while shutting them down wholesale isn't a good look, politically.
Sure, recreational legalization is a whole new ballgame. But is it? Proposition 64 would largely mirror regulations recently established for medical marijuana by the state legislature. And it would allow local jurisdictions — like L.A. County, for example — to continue to ban weed sellers.
Is the Board of Supervisors ready to reverse its position on pot businesses in the name of tax revenues?
County bean counters have estimated that a local recreational pot tax could raise $78 million to $130 million a year — but only if there are enough legal sellers out there to contribute.
Another huge issue for Kuehl's original tax proposal is that there are already several other proposals on the table that would heavily tax the marijuana industry. Proposition 64 would impose a 15 percent tax on sales. While Kuehl's original idea was to tax gross receipts, it's likely that extra 10 percent would be passed on to buyers, at least indirectly. Meanwhile, municipalities, like the city of L.A., have their own pot taxes (L.A.'s is 5 percent), which likely would transfer to recreational sales should medical dispensaries be able to legally sell those products.
In other words, that's a lot of tax piling up. In fact, many marijuana advocates are worried that weed users will more or less be taxed back into the hands of street dealers, which would negate one of the chief objectives of legalization.
It's not clear if this was also a concern for Kuehl. We were told that she would issue a statement on the matter today. The board is also scheduled to decide the fate of the county pot tax. We'll keep you posted.
UPDATE at 12:02 p.m. Tuesday, July 26, 2016: The board has voted to rescind the tax measure.
UPDATE at 2:30 p.m. Tuesday, July 26, 2016: Kuehl's office says the vote would not affect the $100 million already pledged for homeless services this year.
She reiterated that homeless services providers needed to be on the same page when it comes to taxing pot businesses.
"Homeless service providers are our front lines in the county effort to end homelessness," Kuehl said. "If they are not 100 percent on board with this measure, then we owe it to them to reconsider our plan of action."