Los Angeles is known for a lot of things, but two in particular, one good, the other bad: medical marijuana dispensaries and a large and growing population of homeless people. Now one of those things could be used to help deal with the other.
City leaders passed a $2 billion program in 2016 that is designed to give homeless residents affordable housing, along with support services that could help them recover from years on Skid Row.
The plan, set to take shape over the next decade, will be funded in part by a $1 billion public bond issue to be paid back by the city over the next 30 years. Property taxes would cover most or all of the cost of the debt.
But Los Angeles officials are also considering another source of money to fund affordable housing: a tax on medical marijuana businesses. They’re already discussing the plausibility of a 15 percent tax on grow sites and cannabis sales.
MMJ tax would start to pay for affordable housing
Such a tax, the city estimates, could pull down nearly $17 million annually. It’s a drop in the bucket compared to the overall $2 billion price tag for affordable housing, but officials say it would be a start. And if voters decide to legalize the drug completely in the November election – as is widely expected – the tax haul could skyrocket over the next few years.
Even then, a 15 percent cannabis tax probably wouldn’t account for a large portion of the money needed to house homeless residents. But it could make a difference, and every homeless person who finds a place to live is a victory as far as the city is concerned.
The Los Angeles City Council is set to vote on the proposed marijuana tax by July. But it would still need approval from the city’s voters, either in the November election or in March 2017. If recent referendums are any guide, it would stand at least a decent chance of passing.
For example, voters in 2013 overwhelmingly approved an ordinance that tightly restricts the number of legal dispensaries throughout the city. The law has led to the closure of hundreds of shops operating outside the law, and even resulted in arrests and civil forfeitures.
Voters likely to approve law
Voters don’t seem bothered by those results, so the idea of a 15 percent tax could win approval. It’s too early to tell whether the medical marijuana industry as a whole would oppose it, but its use in helping the homeless could make it more palatable to pot businesses.
Still, resistance from patients themselves could be strong. Medical cannabis patients tend to oppose taxes on marijuana because that would set the drug apart from prescription medications, which are not taxed. In other words, users would have to pay taxes on a medical treatment they believe is as legitimate as untaxed pharmaceuticals.
It’s no surprise the city is considering new sources of revenue to tackle homelessness. The population of Los Angeles without permanent housing jumped by 12 percent in just the last two years. In addition to the proposed pot levy and the bond issue, the tax rate on real estate could double to cover the costs.