City Hall Says It Will No Longer Collect Taxes From Shady Pot Shops

City Hall Says It Will No Longer Collect Taxes From Shady Pot Shops
File photo by Susan Slade Sanchez/L.A. Weekly

Proposition D, a voter-approved initiative in 2013, was conceived to give 135 or fewer Los Angeles marijuana dispensaries and their customers some freedom from law enforcement.

But the fine print, drafted by the L.A. City Attorney's Office as part of a compromise with Proposition D's original advocates, has continuously given little legitimacy to those collectives.

The language doesn't really legalize or permit cannabis collectives, and weed delivery is illegal unless done by a patient's particular primary caregiver (e.g., a home nurse), the City Attorney's Office has said. Select pot shops covered by Proposition D exist only with "limited immunity" from prosecution. They're otherwise illicit.

So-called Proposition D dispensaries can't even get a permit from City Hall.

But they can get a tax certificate in order to pay a required 5 percent tribute to the fine people of Los Angeles. 

In fact, it's law that dispensaries pay this tax. Voters approved it under Measure M in 2011.

But the City Council yesterday voted to end the issuance of new tax certificates to pot businesses. It turns out the city can't always figure out which places are quasi-legit and which are fly-by-night storefronts.

Some dispensaries have been displaying and using tax certificates as if they're city permits. They are not. They simply signify that one has signed up to pay taxes. 

"They shouldn't be operating, because they don't fall within the law, and we shouldn't be collecting taxes on these businesses that are illegally operating,'' Councilwoman Nury Martinez told City News Service. "As much as we try to shut the illegal ones down, they turn around and we issue a BTRC (business tax registration certificate) to them.''

Councilman Joe Buscaino argued that the so-called Proposition D–compliant shops already had to register with the city way back in 2007, so there was no need to issue new tax certificates to collectives, most of which are outlaws.

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Many of those original shops have moved, and some have multiplied, however.

The ordinance passed by the council says those older shops can still renew their tax licenses, but they have to do so with an affidavit attesting that they're original Proposition D stores. The law would make it a misdemeanor to lie about that.

Yami Bolanos, president and founder of Greater Los Angeles Collective Alliance, which spearheaded Proposition D and which represents a core group of quasi-legit shops in L.A., says the council's move this week is good for her members.

"I'm happy about the decision," she told us. "They're finally getting their house in order. It will certainly help to weed out the illegal shops and give us an even playing ground."

Mayor Eric Garcetti still needs to endorse the ordinance. It could give those 135 or fewer Proposition D shops a serious leg up in a town with hundreds of illegal weed stores.

-With reporting from City News Service


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