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San Jose Collects $290,000 In First Month of Marijuana Tax


By Steve Elliott of Toke of the Town

San Jose, California now has its first month’s worth of marijuana tax in hand. “As of May 10, 73 medical marijuana collectives have remitted approximately $290,000 in taxes for the month of March,” the city announced on Friday.

Until the money was counted, nobody had been quite sure exactly how much San Jose’s medical marijuana tax might yield for the city’s empty coffers.

Starting March 1, San Jose slapped a seven percent tax on medical marijuana dispensaries under a measure city voters overwhelmingly approved last November. Even though San Jose officially considers all 100 or so of its dispensaries to be unlawful, pot providers are still required to pay the special marijuana tax to the cash-strapped city.

Most dispensary owners always assumed taxation would also mean legal acceptance, but now it appears the beleaguered providers will be catching it from both sides: they’re still subject to police raids at the same time they are responsible for paying taxes.

San Jose has emerged as a key medical marijuana battleground in California, but that hasn’t stopped its broke city government from wanting a piece of the financial action.

City officials claim that taxes must be paid on medical marijuana sales, regardless of the dispensaries’ legal status. Though most local shops were already paying city business and California sales taxes, city officials claimed they weren’t getting their fair share.

But meanwhile city officials said in a February memorandum that a review has determined that all of the known medical marijuana dispensaries in town violate council guidelines limiting them to commercial areas and requiring them to be at least 500 feet from homes, schools, libraries, daycare centers and each other.

The whole situation understandably seems surreal to San Jose’s dispensary owners.

“It’s in the code that you have to tax these businesses, but you don’t have to — even when you take their money — say they’re legitimate businesses,” said David Hodges, founder of the San Jose Cannabis Buyers Collective, which relocated after city code enforcers threatened to fine its landlord.

?San Jose saw the number of dispensaries go from zero to more than 100 in less than two years after City Councilman Pierluigi Oliverio suggested the city consider allowing and taxing a limited number of them. Voters — who have seen city services cut due to budget shortfalls — approved the Oliverio-sponsored tax, Measure U, with 78 percent approving it last November.

San Jose is facing a 10th straight year of red ink, looking at a $110 million deficit this year. City officials were eager to start collecting the new tax, even though zoning regulations allowing the shops are still months away from a vote.

According to Friday’s letter, signed by Deputy City Manager Deanna J. Santana, Director of Finance Scott P. Johnson, and Director of Planning, Building & Code Enforcement Joseph Horwedel, San Jose’s Marijuana Business Tax (MBT) “is due monthly or or before the last day of the following month,” so March’s taxes were due on April 30.

City staff members have identified about 105 medical marijuana collectives currently operating in San Jose which have been issued business tax certificates.

“The Finance Department is working with the City Manager’s Budget Office to develop a Marijuana Business Tax forecast, but this forecast can only be considered preliminary given the limited amount of collection data and the many factors that need to be integrated into the revenue projections,” the letter reads. “These factors include future business closures and the impact of implementation of the City’s Medical Marijuana Regulatory Program.”

According to the letter, the City Manager’s Office will, later this month, issue a Manager’s Budget Addendum “that will reflect all of the budgetary actions required to implement and sustain the Medical Marijuana Regulatory Program.”

Regulatory efforts will “include on-going periodic revenue compliance audits of all collectives operating in the City, and implement immediate compliance actions on those Collectives that did not remit timely tax payments,” the letter reads. “A failure to pay on or before the due date results in a penalty of 25% of the amount of the tax due, plus interest on the unpaid tax.”

The city apparently plans to enforce zoning regulations, land use regulations and state law (such as the enforcement of an existing state law prohibiting marijuana dispensaries within 600 feet of schools) to reduce the number of dispensaries in San Jose to only 10 by September.

On a “Preliminary Implementation Timeline” published in the letter, “GOAL: Select 10 Collectives and Process Registration with the City” is seen as a “deliverable milestone” for September.

For the most up-do-date information on the implementation timeline for San Jose’s establishing zoning and land use regulations for dispensaries, visit the city’s medical marijuana web page.

Article From Toke of the Town and republished with special permission.


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  1. smart money,,we should just legalize marijuana,,prices will drop, but with 50 states of revenue and tax would be billions in a year,,and its the best source of ethanol,, no worse than what we have legalized already,less money spent on the drug war,, and that would save millions every year!! marijuana would be the biggest, and best way to make money that the economy needs, and would happen very rapidly!!! our president laughed at the idea,, but politicians would rather take medicare from old people,,and take money from education, by cutting teachers jobs,,less funding for schools that teach your children and mine,,why would you rather do this to old people and children,,be easier to sell the PLANT and make use of it,, anyway we can,,marijuana is the biggest buisness!!! I guarantee marijuana is in the top 5 things that makes the most money in the world,, how stupid can you be!! IF SOME BILLIONAIRES LOSE MONEY ,,, HEY THATS BUISNESS IN THIS WORLD,,”””YOU DONT ALWAYS GET WHAT YOU WANT””

  2. If you are a prohibitionist then you need to ask yourself the following questions:

    Why do you wish to continue to spend $50 billion a year to prosecute and cage your fellow citizens for choosing drugs which are not more dangerous than those of which you yourself use and approve of (alcohol and tobacco)?

    Why are you willing to waste another trillion dollars on this garbage policy

    Why do you need to wage war on your own family, friends and neighbors?

    Why are you happy that America has the largest prison population of the whole planet?

    Why are you helping to fuel a budget crisis to the point of closing schools and libraries?

    Why are you helping to waste precious resources on prohibition related undercover work while rapists and murderers walk free?

    Why aren’t you not concerned that many cases do not get taken to trial because law enforcement priorities are subverted by your beloved failed and dangerous policy of prohibition?

    Why are you such a fan of the prison-industrial-complex to the point of even endangering your own children?

    Will you applaud when, and due to your incipient authoritarian approach, your own child is caged and raped?

    Will you also applaud when your own child , due to an unnecessary and counter productive felony conviction, can no longer find employment?

    Private prisons are publicly traded and their stock value is tied to the number of inmates. Here’s what the UK Economist Magazine thinks of the situation: “Never in the civilised world have so many been locked up for so little” http://www.economist.com/node/16636027

    According to Paul Craig Roberts, a former editor of the Wall Street Journal and former assistant secretary to the treasury under Ronald Reagan, “Police in the US now rival criminals, and exceed terrorists as the greatest threat to the American public.”

    “Narcotics police are an enormous, corrupt international bureaucracy … and now fund a coterie of researchers who provide them with ‘scientific support’ … fanatics who distort the legitimate research of others. … The anti-marijuana campaign is a cancerous tissue of lies, undermining law enforcement, aggravating the drug problem, depriving the sick of needed help, and suckering well-intentioned conservatives and countless frightened parents.” — William F. Buckley, Commentary in The National Review, April 29, 1983, p. 495

    There is no conflict between liberty and safety. We will have both or neither.
    Ramsey Clark (1927–)

    You must know by now, that prohibition does not keep drugs away from our children. Drugs are easily obtainable in almost every school in the US. There would be less drugs in US schools if drugs were legally regulated. This is no different than what happened during the 1920s:

    “It has made potential drunkards of the youth of the land, not because intoxicating liquor appeals to their taste or disposition, but because it is a forbidden thing, and because it is forbidden makes an irresistible appeal to the unformed and immature. It has brought into our midst the intemperate woman, the most fearsome and menacing thing for the future of our national life.”


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