cannabisnews.com: Struggling Cities Turn To a Crop for Cash
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Struggling Cities Turn To a Crop for Cash
Posted by CN Staff on February 11, 2012 at 17:11:35 PT
By Michael Cooper
Source: New York Times
Oakland, Calif. -- As the stubborn economic downturn has forced this city to take painful steps to balance its budget in recent years, it has increasingly turned to one of its newer industries to raise much-needed revenues: medical marijuana dispensaries. The city has raised taxes on marijuana dispensaries several times in the past few years, and last year it collected $1.4 million in taxes from them — nearly 3 percent of all the business taxes it collected. Now Oakland plans to double the number of dispensaries it licenses, to eight from the current four, in the hopes that it can collect even more revenue.
“This is general fund revenue — it all goes into the melting pot,” said David McPherson, the city’s tax and revenue administrator. “When you’re making decisions about what to continue keeping or not, it goes into that decision process. If you don’t have that money, then you’re making other decisions about ‘Are we going to close the libraries on Monday?’ ‘Are you going to end up cutting a cop?’ ‘Are you not giving funds to our arts and things that help our kids?’ ” Sometimes lost in the discussion of medical marijuana is the extent to which it has become a small but growing source of new tax collections for cities and states that have been struggling to balance their budgets for more than four years now. Colorado Springs collected more than $700,000 in taxes from the medical marijuana industry in 2011. It is not a lot of money for a big city. But given the harsh steps the city has taken in recent years — in 2010 it shut off a third of its streetlights to save $1.2 million — every bit helps. Denver collected more than $3.4 million last year from sales tax and application and license fees, according to preliminary figures. The State of Colorado collected $5 million in sales tax from medical marijuana businesses last year, more than twice what it collected the year before. Taxing marijuana is a relatively new field, and cities and states are taking different approaches to raising revenues. Maine decided that medical marijuana should be subjected to the state’s 5 percent sales tax — unless the marijuana is baked into brownies. In that case, it is taxed at a higher 7 percent rate that the state levies on prepared foods. Oregon closed a budget gap last year in part by raising the annual fees it charges people with doctors’ notes to join the state’s medical marijuana program. In October, the state doubled the fee to $200 a year — with reduced fees available to people on food stamps — to raise an estimated $6.7 million a year to pay for other health programs. Of course, some of the money raised must be used to administer the medical marijuana programs and, in some cases, to increase regulation of the industry. Budget planners always deal in uncertainties like whether tax revenues will rebound or how much it will really cost to provide services. But projecting medical marijuana revenues adds other layers of complications, including whether the federal government will shut down the dispensaries that state and local governments have decided to allow. After signaling in 2009 that it would not normally pursue groups providing marijuana to sick patients, the Justice Department has cracked down on dispensaries in a number of states in recent months. The Internal Revenue Service has targeted a number of dispensaries that pay federal taxes as well, arguing that they are not entitled to the regular business deductions they have claimed because they should be considered drug trafficking organizations. It has made life complicated for cities. “What we do know is the federal government has made it complicated and the state government has made it complicated and it all flows downhill to us,” said Mayor Chuck Reed of San Jose, Calif., which collects about $2.5 million in taxes from the 100 marijuana dispensaries that have opened in the city. Here in Oakland, medical marijuana is booming. Just a few blocks from City Hall is Oaksterdam University, which offers training for people in the industry with classes in state and federal law, civics, legal business structures and various “methods of ingestion.” The biggest dispensary in the city by far, Harborside Health Center, has 104,000 customers and employs 120 people, 90 percent of whom are from Oakland, in well-paying jobs with good benefits. Its executive director, Stephen DeAngelo, helped lead the movement several years ago to have the city tax the marijuana industry. “At that time, the city was talking about closing down some really beloved institutions,” he said, adding that Oakland’s fiscal plight led the center to think about ways of helping the city. “What better way of doing that than with a tax?” But when the city tripled the tax rate to 5 percent in 2010, he worried. “I thought 5 percent was a bit excessive,” Mr. DeAngelo said, but he added that the center was able to absorb the costs. Now, he said, the center is among the biggest taxpayers in Oakland. Oakland will probably not be able to double its tax collections by doubling the number of dispensaries. Mr. McPherson, the city tax administrator, said that in many cases the same pool of medical marijuana users would simply be choosing from more places. But opening a dispensary near the Berkeley border, he said, might capture some of the Oakland residents who currently go to a dispensary in Berkeley. Mr. McPherson said the city stood to reap more of what he called the “secondary benefits.” “You’ve got accountants that are working for them, you’ve got all the security companies that are working for them, you have labs that are working for them, you have bakeries that are baking all the edibles, you have union employees that are getting great benefits, you have delivery services, hydroponic stores, doctors get some benefit,” he said. “It’s the secondary market that gains from this, and all of those pay business taxes to us.” A version of this article appeared in print on February 12, 2012, on page A22 of the New York edition with the headline: Struggling Cities Turn to a Crop for Cash.Source: New York Times (NY)Author: Michael CooperPublished: February 12, 2012Copyright: 2012 The New York Times CompanyContact: letters nytimes.comWebsite: http://www.nytimes.com/URL: http://drugsense.org/url/euOwM7H1CannabisNews Medical Marijuana Archiveshttp://cannabisnews.com/news/list/medical.shtml
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Comment #9 posted by afterburner on February 14, 2012 at 09:07:15 PT
ekim #6
Here's a poignant excerpt from ekim's link to one of Kapt's posts: { "The Reasonable Working Alternative to Cannabis Prohibition"If any government wishes to succeed in protecting adolescents and young people against any ill effects (their supposition - not mine) that they perceive from cannabis use in these age groups, then they need to be getting started with formulating a regulatory system for the supply and use of cannabis that incorporates workable laws for non-adult use. At the moment, young people have no protection at all."The government answer in increased tax expenditure to further the efforts of law enforcement is not the answer, as portrayed by the fact that the government has failed to reduce cannabis use in the aforementioned age groups. If anything, even more young people are experimenting with cannabis today. The government is responsible for the consequences of drug use by minors in that they have failed to address cannabis law reform in a properly regulated manner." }
--Sativex: The Trojan Horse to Permanent Cannabis Prohibition.
by Jayelle Farmer, June 18 2011.
Part 05: Pushing out the Trojan Horse & The Reasonable Working Alternative to Cannabis Prohibition
http://www.jayelle.mondialvillage.com/trojanhorse/part05.html
[ Post Comment ]
Comment #8 posted by Hope on February 13, 2012 at 08:08:43 PT
Ahh.... and the criminal industry...
They are about making money and creating jobs. They aren't worried so much about the unprofitable crimes like murder, assault, rape, and theft. No profit in that for them.Hence, the ultra importance of drug crime. Whoo hoo... now there's some profit in that.I remember it well. A few in positions to make laws were horrified and warned sternly of the negative effect that policing for profit would have. Ah, but the ones' with the dollar signs in their eyes... they pushed it all on through. And here we are today. A nation that polices it's people with financial profit and greed in mind.Sorry situation indeed. But the zombies won't let anyone near enough the laws to rescue those they feed off of.
[ Post Comment ]
Comment #7 posted by Hope on February 13, 2012 at 08:00:24 PT
Well of course...
the government and the governmental apostles and the criminal industry want to keep us a nation of criminals. Of course. They live off keeping us as criminal as possible. It's the hole in us they, the parasitic prohibitionists, feed through... sucking the very life and the blood out of the nation. The young among us are especially vulnerable to the prohibitionist's parasitic ability to suck one's entire life and future out of them.
[ Post Comment ]
Comment #6 posted by ekim on February 12, 2012 at 14:16:01 PT
one of the Kapts recent posts on that #4
http://www.drugwarrant.com/2012/02/odds-and-ends-57/comment-page-1/#comment-106605
[ Post Comment ]
Comment #5 posted by The GCW on February 12, 2012 at 07:16:49 PT
Interesting related perspective.
US CO: Emerging movement encourages sheriffs to act as shield against federal tyranny
Webpage: http://www.denverpost.com/news/ci_19946455
Pubdate: 12 Feb. 2012
Source: Denver Post (CO)The 100 or so sheriffs gathered in a Las Vegas hotel ballroom two weeks ago learned that some weighty titles have been attached to the stars they wear on their chests."Ultimate enforcers of the Constitution." "Protectors against government tyranny." "America's last hope." "Brave oath keepers." And the sheriffs, including eight from Colorado, learned that they need to protect their citizenry from much more than local lawbreakers. In today's world, public enemy No. 1 just might be the federal government — or the "out-of-control federal bureaucracy," as organizers of the convention like to refer to it.The person who will "stand tall against federal tyranny," even if it means armed resistance, according to organizers, is the county sheriff....Steven Hall, a spokesman for the BLM, said he doesn't want to argue with sheriffs about interpretations of the Constitution and federal jurisdiction on federal lands. He said that for the most part, his agency has good working relationships with sheriffs, especially when it comes to issues such as fighting wildfires and eradicating marijuana. Cont. w/ comments after article
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Comment #4 posted by josephlacerenza on February 12, 2012 at 07:11:05 PT
Sativex, What it Means for the MMJ Community
You have heard of Sativex by GW Pharmaceuticals, yes? Now find out that Bayer AG is a partner with them! http://www.gwpharm.com/gw-partners.aspx Bayer, who are they? http://en.wikipedia.org/wiki/Bayer Now you know why this administration has been so admit about stopping medical cannabis. They are paving the way for the BIG guys, period!
Reefer Madness
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Comment #3 posted by ekim on February 12, 2012 at 06:40:47 PT
Fox has canceled Judge Napolitano show
he said last fri that thiscomming week would be his last show
but he would be doing other things to keep the people
informed.
[ Post Comment ]
Comment #2 posted by Paul Pot on February 11, 2012 at 19:36:43 PT:
tax reform
Like prohibition, taxation too needs an overhaul. Taxes on things can be descriminatory, remember the 1937 marijuana tax act.
To be fair on everyone the only thing that should be taxed is money and where do you find the money, in the bank.
Just tax that, most of it belongs to big business anyway, make them pay their fair share.
Whenever a withdrawal is made just take a few % of that amount out of the account. Tax paid.Simple.
The financial trade is laughing at the rest of us because the 99% subsidies the 1% through taxes and regulations.
[ Post Comment ]
Comment #1 posted by ekim on February 11, 2012 at 19:21:42 PT
Howard is out and about
http://michiganmedicalmarijuana.org/topic/37584-cowboy-cop-makes-the-conservative-case-for-marijuana-legalization-at-cpac/page__pid__360757#entry360757
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