Business & Economy

LA may have 2 competing pot tax measures on March ballot

A marijuana plant at the 2016 Cannabis Business Summit & Expo in Oakland.
A marijuana plant at the 2016 Cannabis Business Summit & Expo in Oakland.
Justin Sullivan/Getty Images

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With the state possibly on the verge of legalizing recreational marijuana, two competing initiatives to regulate and tax marijuana in the city of Los Angeles may be headed for the March 2017 ballot.

The L.A. city council is scheduled to vote on the two versions on Tuesday. 

Why two? The short answer is, there’s a marijuana industry version and a city version.

Both would tax businesses that sell recreational and medicinal pot. The industry version sets the gross receipts tax at 8 percent for both types of dispensaries. The city's mesaure would set the rate at 5 percent for medicinal marijuana and 10 percent for recreational.

"The difference between the levels of tax is not that great," said L.A. councilman Bob Blumenfield. The main difference between the two measures lies in the details about regulating the industry.

Each would set up a process to create rules for things such as the number of dispensaries, their locations, how close they can be to schools and how and where pot can be advertised.

Blumenfield worries that the industry version would give pot sellers too much say. That's why it came up with its own measure after the industry gathered enough signatures to place its initiative on the March ballot.

"The city needed to act quickly in order to retake control over this issue," Blumenfield said, "rather than letting the fox write the rules about the chicken coop."

The marijuana industry doesn't have a problem with the city's proposed ballot measure, said Jerred Kiloh, president of the United Cannabis Business Alliance Trade Association. The group, which represents L.A.'s pot dispensaries, is a little miffed about spending all of that time and money gathering signatures for its initiative, only to have the city step in at the last minute with its own proposal, he said.

If voters pass Prop. 64 on Nov. 8 and legalize recreational marijuana, the cannabis industry is expected to double in value - up to $6 billion a year – within the next few years.

The city is holding three public hearings on issues regarding regulation and taxation of recreational pot starting this week.