You Could Wake Up to a Big Pot Discount the Day After Legalization. Or Not

A discount for this fine product could be headed your way.
A discount for this fine product could be headed your way.
Gustavo Turner/L.A. Weekly

If you legalize recreational marijuana at the polls Nov. 8, you'll be in for a pretty nice discount at the cash register of your local dispensary starting the very next morning.

That, at least, was the gist of a statement circulated this week by state tax official Jerome E. Horton. He says medical marijuana buyers with state pot IDs would immediately get a 5.5 percent sales tax break, and that this would cost taxpayers $49.5 million in 2017.

Horton, a member of the Board of Equalization, cites "an informal opinion from the State Legislative Counsel," according to his statement. "This will be devastating to state and local governments, who will be on the hook for mitigating the negative criminal impacts of getting high in our communities," according to Horton's office.

But marijuana advocates say Horton may be wrong. The Drug Policy Alliance, which helped write the pot legalization measure, Proposition 64, says the state Legislative Counsel's Office has no record of providing Horton with an opinion on the initiative. "I certainly have never heard this," says DPA state director Lynne Lyman.

Medical marijuana patients with state pot ID cards are supposed to get a break from the regular state sales tax they pay now in order to offset some of the cost of Proposition 64's 15 percent cannabis tax at the register, pot advocates say. The state sales tax is 7.5 percent (although Horton puts the discount for medical buyers at 5.5 percent). 

"The exemption is to provide relief to patients once the new excise tax takes effect," says Tamar Todd, California legal director of the DPA.

She says it is widely expected that the tax break would take effect in January 2018 — which, if the law passes, would be the first possible time licensed recreational shops could open their doors. It's not clear why Horton believes the tax break would kick in Nov. 9 if 64 passes. We reached out to his office for clarification but did not hear back. "We think he's mistaken," Todd says.

In fact, the DPA says the authors of Proposition 64 consulted with the state Board of Equalization when it created the tax language to ensure it was kosher this way, according to Todd. "We drafted it in cooperation with BOE staff, which will be collecting the tax," she says.


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