RESIST THE TEMPTATION TO PUNISH TWO UNPOPULAR BUSINESSES

There are two tax-raising measures on Los Angeles' March 8 municipal
ballot. While the taxes are intended for two very different
industries - medical marijuana and oil production - the larger intent
behind the taxes is the same: squeeze unpopular businesses to help
the city fill its ever-growing deficit.

That's a bad reason to punish businesses that, like them or not,
contribute to the local economy. We urge voters to put their inherent
distaste of pot and oil aside and say no to both Measures O and M.

It might be difficult to do; both industries are widely considered to
be morally repugnant cash cows. Why not soak them for more tax
revenue at a time when the city is so strapped that it is shuttering
libraries and fire companies and letting parks and streets go
unmaintained? However, to allow this kind of singling out has larger
economic and societal costs than the few millions that the city will
collect, and possibly squander.

Measure 0 for Oil

We love to hate oil companies. Even before the disastrous oil spill
in the Gulf of Mexico last year, most Americans spoke the names "BP,"
"Chevron" and "Exxon" with deep reserves of contempt. They despoil
our natural areas and then gouge us at the pump, all the while
posting obscenely huge profits. But what can we do? We need the
stuff. We are over a barrel, so to speak.

And the city officials backing Measure O are banking on this
sentiment. Surely Big Oil can cough up a few more dollars to give
back to the public?

The oil extraction tax would require oil companies to pay $1.44 on
every barrel they take out of the ground under the city of Los
Angeles. With barrel prices at about $80, that's the equivalent of a
1.8 percent tax. It would be adjusted yearly according to the
Consumer Price Index.

However, Measure O isn't going to stick it to the Chevrons and
Valeros of the world. Instead, it puts an extra burden on local
mid-to small-sized companies that range from eight employees to 80,
business that employ legions of self-employed, local vendors to
maintain wells and help drill news ones. Maybe Measure O will cost
jobs, as the opponents claim, and maybe it won't. It's hard to say,
but it is wrong to squeeze an unpopular business unfairly just because you can.

And for what? A measly $4 million a year into the city's vast general
fund for the mayor and City Council to waste on pet programs or
justify the continuation of an inefficient bureaucratic systems? It's
a figure that will do little to fill in the $350 million - and
ever-growing - budget gap.

Besides, the oil business industry argues persuasively that the city
of Los Angeles already does a thorough job of extracting money from
oil production companies. They pay the highest business tax in the
county (many cities don't even have this abusive tax) and have to
deal with the numerous fees that the city has dreamed up to nickel
and dime businesses. There's a solid argument that oil companies
already pay a fair share.

Supporters of the measure justify the tax with two main points.
First, that the business should pay this tax because of the
"fracking" that comes with oil extraction. Fracking is when a liquid
is injected underground at high pressure to help ease oil and gas
extraction. It can buckle the ground and cause damage to sidewalks,
roads and house foundations. But there's no evidence that is
occurring in any meaningful way to municipal property. And private
owners have the right to make claims against companies if their homes
or businesses are damaged by fracking.

The second reasoning holds even less water: that the oil companies
make plenty of money. That maybe true, but it hardly justifies a tax.

This is an unjustified tax. We urge voters to say no.

Dial M for More Taxes

The second tax issue on the ballot targets another unpopular
business: medical marijuana dispensaries. Measure M (M for marijuana)
imposes a 5 percent tax on the collection of revenue by marijuana in
dispensaries, similar to what other California cities, most notably
Oakland, have already successfully adopted. It would bring in up to
$10 million in revenue each year to the city - maybe more, maybe less.

The argument for the tax is two-fold: One that dispensaries are
businesses and ought to pay local business taxes, and, two, that they
put a burden on city services. The proposal seems straightforward
enough on its face. It's not, though, and its passage would only
further deepen the murkiness in which dispensaries operate.

When voters in 1996 passed Proposition 215, they bucked federal drug
laws by allowing Californians to use "medical" marijuana for their
ailments and injuries. What the proposition didn't do was create a
solid and sensible framework for how this "medicine," would get to
users. In the absence of clear regulation, dispensaries cropped up
like mushrooms throughout the state and, in great numbers, in Los
Angeles. It wasn't until more than a decade later that city leaders
finally started grappling with regulations for and limits on
dispensaries in L.A.

But these rules can't erase the fact that California's medical
marijuana dispensaries still exist in a great gray area of the law.
Under the constructs of Prop. 215, marijuana is medicine. And since
the sale of marijuana is still technically illegal, then the
dispensaries must - at least in theory - operate as non-profits. And
non-profits are exempt from local business tax.

That seems straightforward, too. Again, it isn't. There is a false
mythology surrounding medical marijuana dispensaries - that they are
medical-related businesses serving a few terminal cancer patients and
chronically ill people. The truth is that huge amounts of money are
being passed through dispensaries because anyone who wants to think
up an "illness" can get the paperwork they need to procure pot. City
leaders know this, and they want a cut of the action.

It's a legitimate desire, and not as punitive as Measure O.
Dispensaries do impact neighborhoods tremendously. Police Chief
Charlie Beck, and opponent to the measure, said they are often
magnets for crime because of the large amounts of cash handled on site.

In all likelihood dispensary operators will be happy to pay the tax,
as they do in Oakland, despite their putative non-profit status. Why?
Because they know that paying city taxes gives them a legitimacy and
a future standing in the battle to legalize marijuana.

Until the larger narrative of marijuana as medicine goes up in smoke,
the city should operate under the original premise. We hope voters will agree.