LONG BEACH OFFICIALS WANT TO TAX MARIJUANA

LONG BEACH -- In an attempt to bring new revenue into the city
coffers, Long Beach officials are proposing a tax on marijuana.

Director of Financial Management Lori Ann Farrell is asking the City
Council on Tuesday to set a date for a public hearing to approve
putting a marijuana tax measure on the November ballot. The proposal
was added to the council's agenda this afternoon.

Under Farrell's proposal, medical marijuana collectives, which are
legal under state law, would be charged a 5 percent gross receipts
tax. A tax of 0.75 cents per square foot would be charged for sites
that are used exclusively to cultivate marijuana.

Although recreational marijuana use is illegal, Proposition 19 on the
November ballot would legalize it for people 21 and older.

Considering this possibility, Farrell's proposal also includes a 5
percent to 10 percent gross receipts tax on other marijuana businesses.

If the council OKs the plan Tuesday, a public hearing would be set for
Aug. 3, when the council would vote on whether to place the tax on the
ballot. A majority of Long Beach voters would have to approve the tax
in November for it to go into effect.

The idea of taxing medical marijuana collectives has been bandied
about since the council approved regulations in March that require
collectives to register with the city, pay permit fees and run through
a gamut of other requirements. The law severely restricts where
collectives can be located, keeping them out of residential areas,
away from schools and 1,000 feet away from each other.

The ordinance also requires that Long Beach collectives grow their
marijuana within the city limits and allows them to grow the plant
on-site or to set up a separate cultivation location.

City officials have estimated that there are up to 85 collectives in
Long Beach, but that number is expected to be reduced to 30 once the
new restrictions are fully implemented, according to Farrell's report.
The last day for collectives to apply for a permit was June 18, and on
Sept. 20 a lottery will take place to determine which among those that
are too close together will be allowed to operate.

If voters pass the marijuana tax, Farrell said in her report that she
doesn't yet know how much money the city could raise.

Oakland, which was the first U.S. city to tax medical marijuana
collectives, raised $23,608 in 2008 with a tax rate of $1.20 per
$1,000 of gross receipts, Farrell said. Voters there approved
increasing the tax rate to $18 per $1,000 in July 2009, which was
estimated to raise $294,000.

At $18 per $1,000 of gross revenue, that's only a 1.8 percent tax
rate, much less than the one proposed for Long Beach.

Any extra revenue would be welcomed by Long Beach officials as the
city faces an $18.5 million budget deficit in the next fiscal year
that begins Oct. 1 and more shortfalls for at least the next two years.

Other cities, including Berkeley and Sacramento, are considering
marijuana taxes as well.

However, Kris Hermes, spokesman for Americans for Safe Access, the
country's largest medical marijuana advocacy group, said Long Beach's
proposed 5 percent tax is "pretty steep."

He said the tax could just get passed on to medical marijuana patients
who may not be able to afford it. Ideally, no marijuana tax would be
placed on the ballot, he said.

"We don't believe that patients should be taxed at all for their
medication," Hermes said.

The organization considers marijuana to be the equivalent of
prescription drugs, which aren't taxed, Hermes said. On the other
hand, cannabis is in a gray area - it isn't recognized as a legal drug
by the federal government, and doctors don't give actual prescriptions
for it.

Hermes said it is still much closer to a prescription medication than
to an aspirin.

"You can't just go into the pharmacy and get it over the counter," he
said. "You need to go to a physician and get a recommendation."

The council meets at 5 p.m. Tuesday in City Hall, 333 W. Ocean Blvd.
The meeting can be viewed live in Long Beach on Charter Communications
Channel 3, Verizon FiOS channel 21, and online at www.longbeach.gov.