April 20, 2016

Los Angeles city officials are currently mulling over a new proposed cannabis tax, the revenue from which could fund a housing project. It’s a noble idea, for sure. But what if it also drives patients to the black market?

Housing and Marijuana?

City officials recently approved a $2 billion housing project—to be completed over the next ten years—that would provide residents with affordable housing units and support services.

Hello Taxes (gulp)!

According to Councilmember Herb Wesson’s office, the city of LA is considering a medical marijuana tax that, if approved, would enact a 15% tax rate on cultivation and sale of medical marijuana.

An MMJ tax could alone bring in about $17 million per year. While it might not come close to paying the $2 billion over the next decade, that figure would soar if California votes to legalize recreational marijuana this year.

The Los Angeles City Council will decide on the proposal, as well as any other funding options, by July of 2016 and whatever is approved for the ballot will be voted on by voters in either November of 2016 or March of 2017.

The Concern: Too Much Green Out of Our Pockets

Of course, the obvious problem is higher prices on cannabis products. Approval of this proposal would, in essence, double the overall tax rate on cannabis in Los Angeles – this proposed 15% rate PLUS state and local taxes that, combined, are already over 15% in some areas of metro Los Angeles.

If patients are asked to pay such higher prices, they might be forced to seek their medication from the black market.

That’s why it’s important to keep an eye on this. Lawmakers should be made aware that too much taxation is counterproductive and could backfire, even if the collected revenue from said tax goes to such a good cause as helping build housing.

Keep up with Manzuri Law as this issue develops over the next few months.

Disclaimer: This article has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice.