OAKLAND TAKES STEP TOWARD MEDICAL MARIJUANA TAX

OAKLAND -- A proposal to increase the business tax on Oakland's four
medical marijuana dispensaries won the support of a four-member City
Council committee Tuesday, and it could be headed for the ballot July
21.

The tax increase is billed as one way to generate a small amount of
additional revenue from medical marijuana dispensaries, which require
more oversight than typical businesses, for a city facing a deficit
that could reach $65 million in the 2009-10 fiscal year.

What remains in dispute is what the new tax rate should be. The
council's finance committee Tuesday sent the proposal on to the full
council, which could set the proposed tax rate at anywhere from $12 to
$24 for every $1,000 in gross receipts.

The dispensaries, which now pay the same business tax as other retail
operations, are on board with an increase from the $1.20 per $1,000 in
receipts currently paid.

But James Anthony, an attorney for Harborside Health Center, one of
the four legally operating dispensaries, said the proposed tax should
be no higher than $14 per $1,000 if the city expects support.

"I'm afraid if it goes too high, we will have a patient revolt," he
said. "And one thing that medical cannabis activists are good at is
winning elections."

Anthony suggested a tax increase to members of the council about a
month ago, he said. He said paying a higher tax rate could show the
120 jurisdictions across the state that have banned medical marijuana
sales that "medical cannabis dispensaries are good neighbors" that can
help provide cities with revenue.

Richard Lee, owner of the Coffeeshop Blue Sky, had a similar take, but
said he would support any tax between $12 and $24 per $1,000, and does
not expect a "patient revolt." He said Coffeeshop Blue Sky would take
the financial hit, without passing costs on to patients.

The full council will take the item under consideration April 21. If
passed by voters, the new tax could generate between $200,000 and
$400,000 in additional annual revenue, depending on what rate is proposed.

Councilmember Nancy Nadel (Downtown-West Oakland) joined Councilmember
Jean Quan (Montclair-Laurel) on Tuesday in supporting a rate of $14
per $1,000. Councilmember Ignacio De La Fuente (Glenview-Fruitvale)
said he will push for $24 per $1,000.

For now, the July 21 ballot includes measures to reduce mandated
spending on youth programs, increase the city's Hotel Tax and close a
loophole in the city's Real Property Transfer Tax ordinance to ensure
transfers of real estate through corporate mergers or acquisitions are
taxable.

Quan has also proposed a quarter-cent city sales tax increase, but the
idea has drawn opposition from other council members and faces a
difficult road to the ballot.