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Berkeley may look to marijuana dispensaries to solve budget woes

Berkeley is the latest California city to consider raising new taxes on medical marijuana collectives to close a growing budget deficit.

The City Council will consider tonight putting a measure on the November ballot to increase the business license tax on its three marijuana dispensaries. They currently pay $1.20 per $1,000 of gross receipts, which nets Berkeley about $22,000 a year.

The proposed ballot measure would amend the tax rate from 0.8% to 1.8%. In comparison, firearm and ammunition businesses pay a 15% tax rate, private rubbish haulers pay a 15% rate, and private sporting events pay a 10% tax rate.

The three medical marijuana dispensaries earn approximately $18.5 million a year, according to a report by the city attorney’s office. The new tax would net the city approximately $330,000 annually. The city’s projected budget deficit is $14.6 million.

The dispensaries are opposed to the proposed tax increase and plan to ask the council tonight to postpone discussion for a later date.

“It’s not cigarettes,” said Erik Miller, the manager of the Berkeley Patients Care Collective. “It’s not alcohol. It’s not recreation. It’s people’s medicine. I don’t think taxing sick people is the way to raise money.”

Oakland recently levied a new $1.8% tax per $1,000 sold on its medical marijuana dispensaries. The city estimated the new tax will garner $1 million a year. Sacramento and San Jose are considering similar steps. California residents will vote on a statewide initiative in November that would legalize recreational pot use. Its supporters believe that initiative will bring more tax revenues to the state coffers.

The City Council will also discuss amending its current ordinance in order to let groups of citizens and the dispensaries themselves to grow marijuana and make pot brownies, tinctures, and other pot products throughout the city.

Currently, the three dispensaries are not growing their own marijuana or producing their own medicinal products. They rely on local collectives to sell them cannabis or the products. This has meant shortages and no guarantee of quality, said Brad Senesac, the director of communications for the Berkeley Patients Group, the city’s largest dispensary.

If the city council amends the current law – and they will look at two different proposals tonight, one put forward by staff and one put forward by the Medical Marijuana Commission – the dispensaries would take a more direct role in getting product. They could open ancillary sites to grow weed or make tinctures and other products.  Other private citizens could do the same.

But these would not be retail operations. The law will still limit the number of city dispensaries to three. All growing or production operations will be subject to zoning laws.

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  • http://basiscraft.com Thomas Lord

    “I don’t think taxing sick people is the way to raise money.”

    Right. Uh huh. Because there’s absolutely no corruption at all about who gets teh card. I mean, it’s not at all like you can walk around and buy (branded, no less) dispensary pot off the street, or find a card-holder willing to go in score you some if you’ll front some cash — well, except, it’s exactly like that. But at least it’s not like you can get a card for $100, no serious questions asked — except that it’s exactly like that. Well, it’s not like some of the dispensaries have cultured a kind of party atmosphere, as if they were dutch cafes – only they have.

    I’m pro-legalization. Straight-up legalization, yup. I’m *way* pro patient and do strongly believe in legitimate medical uses. But I’m pretty damn anti-hypocrisy.

  • Eric

    Wow, $20 million in gross pot sales in Berkeley? Frances, would love to see some follow-up reporting on the economics of this business — I’m surprised that they do that kind of volume for medicinal purposes. How does it compare to a pharmacy or medical supply house in terms of patients/scrips filled? Is any of that for pipes and such or is it all for pot?

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  • http://marijuanagrowingexpert.com marijuana cultivation

    I think there still a lot to be taken into consideration before implementing it. Not all user should be taxed. Example not all user are using it for recreational purposes. How about the people who are sick and are in need to use it? Are they liable to pay for the said tax?