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Marijuana business tax will be on the November ballot in L.A. County

| Jul 15, 2016 | News

by Abby Sewell // LA Times

Los Angeles County supervisors voted Tuesday to place a marijuana business tax on the November ballot, with the proceeds intended to pay for homeless services.

The proposal calls for a 10% levy on the gross receipts of businesses that produce or distribute marijuana and related products. It would apply to medical marijuana operations as well as the recreational marijuana industry if California voters decide to legalize it in November.

County analysts estimated that the measure, which would require a two-thirds majority vote to pass, would raise up to $130 million a year to pay for mental health and substance abuse treatment, rental subsidies, emergency housing and other services intended to get and keep people off the streets.
About $13 million of the revenue is expected to come from the medical marijuana industry. Officials acknowledged that the actual total would depend on how much of the existing illicit marijuana market crosses into legal venues.

If recreational marijuana is legalized at the state level, the county would not be able to begin collecting taxes on that industry until 2018. Tuesday’s 3-2 vote comes on the heels of a move by the Los Angeles City Council to place a $1.2-billion bond initiative on the ballot to build more housing for the homeless. The bond money could be used only for construction, not to provide services once people are housed.
The supervisors have been mulling several options to raise more money to fund homeless outreach.

Initially they had hoped to pursue a “millionaire’s tax” on high-income earners. But the county does not have the legal authority to raise income taxes, so officials pushed for a change in state law that would have allowed them to go forward.

After that effort failed, Supervisor Mark Ridley-Thomas proposed placing a property tax on the ballot. The supervisors also considered a sales tax, but neither proposal was able to get majority support on the board.