L.A. Has Collected $8.6 Million in Taxes from Medical Marijuana Shops

By Elizabeth Hsing-Huei Chou, City News Service

The city of Los Angeles has collected $8.6 million in business taxes from medical marijuana facilities since the taxation of such shops began nearly three years ago, the head of the city finance office said Wednesday.

The city has continued issuing tax registration certificates to medical marijuana facilities despite last May’s passage by voters of Proposition D, which limited the number of dispensaries to the roughly 135 that registered with the city prior to September 2007. The proposition also placed restrictions on their operation.

Since July 20, 2013, when Proposition D took effect, 297 tax registration certificates have been issued to medical marijuana facilities, according to Antoinette Christovale, general manager of the city Office of Finance.

Over the years, the city has issued a total of 1,400 tax registration certificates to so-called “medical marijuana collectives,” and since the taxation began in April of 2011, the city has collected $8.6 million from such businesses, Christovale said.

“The city of Los Angeles has collected $1.6 million in business taxes from (businesses) who have filed under the (medical marijuana) tax category … since the passage of Prop D,” Christovale said.

City Attorney Mike Feuer said Monday that tax registration forms have allowed some medical marijuana shops to pass themselves off as legally operating businesses.

Feuer said his attorneys “have found through our prosecution or enforcement of Proposition D that there is a lot of misinformation among realtors.”

His office has also launched a campaign to inform property owners they can be fined and even jailed for renting or leasing space to an illegally operating marijuana dispensary.

An “urban legend” has circulated among agents that “the mere receipt of a business tax registration certificate displays the lawfulness of a medical marijuana business, and that is false,” Feuer said.

The city attorney said he has no plans to ask the Finance Department to stop issuing the tax registration certificates, but he will be notifying businesses that received the certificates “over the past year” that they are barred from operating under Proposition D.

Of the 1,400 tax registration certificates issued, 1,140 are listed as active, according to Christovale.

Proposition D also included a tax hike that kicked in on Jan. 1, raising the tax from $50 to $60 per $1,000 of gross receipts generated by medical marijuana collectives.

Feuer has prosecuted more than 300 individuals involved in illegal dispensaries, with 27 pot shops closing due to criminal prosecution filed by his office, a Feuer spokesman said.

“Dozens of defendants” at more than 20 of the locations “have paid fines and are on probation,” Rob Wilcox said.

Feuer said this week that about 100 dispensaries in all have closed since the ban, either due to criminal prosecution or voluntarily.

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March 13, 2014  Copyright © 2012 Eastern Group Publications, Inc.

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