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LA Expects $50 Million in Local Recreational Marijuana Tax Collection

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CHRISS W. STREET
Newport Beach, CA

Los Angeles is scrambling to make sure the City of Angeles soon starts collecting at least $50 million a year as the world’s top spot to buy recreational marijuana.

The countdown clock is ticking down to January 2, 2018, when California joins Nevada, Colorado, Washington, Oregon, Massachusetts, Alaska and Washington DC as locations to legally buy marijuana for recreational use.

California state bureaucrats and politicians are almost giddy over the $1.8 billion in annual tax revenue that the New Frontier Financials expects the state will collect from its 15 percent excise and dry-weight taxes on “weed.”

But many of California’s 58 counties and 482 cities are also competing to cash in on the recreational marijuana bonanza by tacking on a local sin sales tax of up to 25 percent of purchase price. Cities including Tulare, Coalinga, Del Rey Oaks, and others have stated that they will use local marijuana tax collections to pay for rapidly increasing public pension contributions that are threatening their solvency.

But the biggest player in recreational marijuana is expected to be Los Angeles that has a population of almost 4 million residents and welcomed 47.3 million visitors last year. The combination of sunshine, Hollywood, top sports venues, large universities, and a huge corporate sector makes Los Angeles a world-class party town.

Despite “limited immunity” offered to the City of Los Angeles’ for only 135 medical marijuana dispensaries, Los Angeles Controller Ron Galperin’s office told the L.A. Daily News that the city had issued 756 business tax registration certificates in 2016 for medical marijuana dispensaries.

California’s legalization of recreational marijuana will drastically increase the demand for marijuana dispensary licenses. A 2016 survey by the California Department of Food and Agriculture found that Los Angeles led the state with 2,718 companies interested in getting dispensary licenses in Los Angeles County. That was far ahead of number to San Diego with interest from 1,415 companies, followed by 1,177 for Sacramento, and 1,141 for Alameda.

The Los Angeles City Council is still working on the regulatory details necessary to launch recreational marijuana sales on January 2. Proposed operating permits would extend licensure to marijuana wholesale distributors, retail stores, manufacturers of edible products and growers.

But one of the more bazaar issues that have been bogging down the process is establishing what the city progressives refer to as establishing a “social equity” component that would give licensing priority to minority black and Hispanic communities. They historically have been the most abused by federal, state and local law enforcement and incarceration efforts in the “war on drugs.”

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