Chronic City: L.A.'s Marijuana Dispensary Ban Could Cost City Millions

By Steve Elliott

Los Angeles' proposed medical marijuana ordinance -- which would ban the sale of pot at dispensaries -- could cost the city $36 million to $74 million in lost sales tax, according to a marijuana advocacy group.

Photo by lavocado, Wikimedia Commons

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​Dale Gieringer, coordinator for the California chapter of the National Organization for the Reform of Marijuana Laws (NORML), said the proposed ordinance, supported by L.A. District Attorney Steve Cooley, would "effectively shut down the city's marijuana distribution system by banning all sales of marijuana and sharply curtailing collectives' ability to grow and obtain medicine."

No other city or county in California has regulated collectives while banning sales, according to NORML.

Under the proposed ordinance, also prominently backed by L.A. City Attorney Carmen Trutanich, only nonprofit medical marijuana collectives -- groups of qualified patients with physicians' recommendations and their primary caregivers -- would be allowed to cultivate the herb to relieve the symptoms of serious illnesses.

NORML.org

Dr. Dale Gieringer, California NORML: L.A. dispensary ban "Ill-conceived"

​"Los Angeles would be foolish to pass this unworkable, ill-conceived ordinance," Gieringer said. "Not only would it cost $36 to $74 million in lost sales taxes and thousands of jobs, but the city can expect serious legal challenges in the courts. The city would be better advised to adopt a system of licensed regulation and taxes, which has proven successful elsewhere in the state."

In Oakland, considered by many a statewide model for the orderly regulation of medical marijuana dispensaries, voters recently passed, with 80 percent of the vote, a special tax on dispensary sales that is expected to put millions of dollars into city coffers. Cities that NORML lauds as having "successful dispensary regulations" also include San Francisco and West Hollywood. According to the pro-pot organization, these city governments are already collecting millions in taxes and license fees from dispensaries.

A survey by California NORML found the dispensaries pay an average of $82,000 in sales tax. At this rate, some $74 million per year in sales tax would be generated if Los Angeles has 900 dispensaries.

According to NORML, other cities and counties that regulate dispensaries allow them to sell to their members as nonprofit collectives as long as they pay sales tax. NORML estimates that there are 100,000 to 200,000 medical marijuana patients in the Los Angeles area, generating between $400 million and $800 million annually in retail sales.

Under the proposed ordinance, which has come under heavy criticism from the medical marijuana community, over-the-counter sales of pot would be outlawed. The collectives would have to be at least 1,000 feet from other collectives, schools, playgrounds, child care facilities, religious institutions, public libraries, public parks, hospitals, and rehab centers.

The normal committee hearing process is being bypassed so that the L.A. city council can fast-track the vote on the hastily written measure as soon as Nov. 3.

There are an estimated 800 to 1,000 marijuana dispensaries in L.A. County. A judge recently ruled the city's temporary moratorium banning new dispensaries was invalid.

NORML said the proposed ordinance would hamper the distribution of medical marijuana in Los Angeles by limiting collectives to a single, 100-plant garden, meaning each dispensary could only serve a handful of members. This would require tens of thousands of collectives and growing operations throughout the city, the pro-pot organization said. According to the group, nothing in state law authorizes such limitations. Most collectives serve hundreds or thousands of members and draw from many gardens.

NORML also objects to a provision in the ordinance that would ban marijuana extracts and edibles, which enable many patients to ingest the herb without smoking it. Oral preparations are especially important for patients who want to avoid the possible respiratory hazards of smoking.

Patient advocates are expected to sue if the restrictive proposed ordinance is passed, on the grounds that it would limit patients' rights to collectively cultivate and obtain medicine, as guaranteed under Proposition 215 and Senate Bill 420.

Last week, a Mason-Dixon poll found that 77 percent of L.A. residents favor regulating marijuana dispensaries rather than banning them.