Measure M is one of those voter initiatives that at first glance look a lot more straightforward than they really are. There are, after all, hundreds of medical marijuana dispensaries in Los Angeles — just look for the green crosses — that pay state sales tax but not city taxes. Measure M would make them pay their fair share and then some, by imposing a steep gross receipts tax. That sounds like a reasonable way to help the city avoid cuts in public services as it digs itself out of a budget hole. But it's a dangerous step.
State lawmakers and municipalities still haven't agreed on how to regulate a drug that the state considers medicinal and the federal government considers illegal, so cities are deciding for themselves. Several — including Oakland, Berkeley, Sacramento, San Jose and Long Beach — have already approved taxes similar to the one that would be imposed by Measure M. And yet the city attorney's office believes that Los Angeles "should not, and indeed legally cannot, allow and tax marijuana sales," and opines that passing Measure M "would be of little or no effect." How can that be?
At the heart of the question is whether or not medical marijuana dispensaries — or collectives, or cooperatives, or whatever they choose to call themselves — are for-profit operations. Back when Gov. Jerry Brown was California's attorney general, he issued an opinion that they can operate only as nonprofit cooperatives or collectives in which patients or their "primary caregivers" grow marijuana and supply other members. They can charge members for their cannabis, but only enough to cover their overhead costs. Yet Brown's opinion hasn't been tested in court, and there is no telling how many of California's storefront dispensaries are really operating as nonprofits. In December, the operators of a San Jose marijuana "collective" were charged with illegal sales and money laundering after police said they discovered two sets of books, one showing an operating loss and the other showing a profit of $222,238.