Berkeley Proposes Taxing Marijuana Dispensaries

By Riya Bhattacharjee
Saturday February 20, 2010 - 07:23:00 PM

If the City of Berkeley has its way, pot in Berkeley might just get a wee bit more expensive. 

Weighed down by a $10 million budget deficit in 2010-2011, the city is proposing to tax Berkeley’s three medical marijuana dispensaries to bring in more revenue by putting a ballot measure in the November election. 

Language drafted by City Attorney Zack Cowan is designed to impose a business license tax on the cannabis clinics based on their square footage, something supporters of medical marijuana in the community aren’t too enthusiastic about. 

Cowan said the idea stemmed from Oakland, whose voters last year approved a sales tax for their dispensaries. 

“I looked at it and said OK, that’s a good idea,” he said. “Why don’t we do something like that in Berkeley?” 

The Berkeley Cannabis Commission, which is in charge of oversight of the city’s dispensaries, discussed the issue at a Feb. 18 meeting. The commission’s members are appointed by the three dispensaries. 

Cannabis commissioner Becky DeKeuster, who is also involved with the Berkeley Patients Group, said Friday that the commission was concerned about the difference between Oakland and Berkeley’s plans when it came to taxing medical marijuana dispensaries. 

“There were some questions about why Zach decided to go for a square foot tax instead of a revenue tax,” DeKeuster said. 

Cowan said that he didn’t want to explore a sales tax option because any organization that attains non-profit status from the California Tax Franchise Board would be exempt from local revenue-based taxes. 

“If we say we’ll tax based on gross tax receipts and that becomes obsolete in a year then we are out of luck,” he said. “I don’t see anything immoral about a business license tax. It’s not like we are asking for $10 million. We are talking about under a million.” 

For the tax to go on the November ballot, the council would have to act on it by the end of July, Cowan said. 

Under Cowan’s proposal, the dispensaries would be charged $10 per square foot.. 

For Berkeley Patients’ Group, which is planning to relocate from its current space on San Pablo Avenue to the former 28,000-square-feet Scharffen Berger factory on Heinz Street, that would mean paying the city $280,000 every year for using the building. 

The clinic ran into choppy waters earlier this year, when Wareham Development and the French-American School, Ecole Bilingue, protested its plans to move, claiming violations of state and federal law. Berkeley Patients’ Group, which contends that it can get an over-the-counter use permit for the space because of a ballot measure approved by Berkeley citizens, is currently in negotiations with both groups. 

Erik Miller, manager of the Patients’ Care Collective on Telegraph Avenue, called the tax “arbitrary and unfair.” 

“$10 per square foot is highly unusual,” Miller said. “The square footage is not all used for dispensaries—at the Berkeley Patients Group, the space is used for acupuncture, massage, healing and other services. I understand the City of Berkeley needs more money but I personally don’t agree with putting an extra tax on sick people’s medicine. It’s ridiculous.” 

Miller said that even if Patients’ Care Collective were able to pay the proposed $8,000 tax for their 800-square-foot site, it would be difficult for Berkeley Patients’ Group alone to absorb the whole amount for their larger space. 

“They would have to raise prices,” he said. “I hope the city is willing to work with us to come up with something that’s reasonable.” 

Calls to Berkeley Patients’ Group were not returned by press time. 

Medical Cannabis Commission Chair Amanda Reiman said that the commission had not yet taken an official position on the proposal. 

“As a commission, we are definitely interested in discussing the possibility of taxing the dispensaries as a revenue generator for the city,” Reiman said. “But we also want to make sure that the dispensaries are not penalized for their large spaces often used for counseling or healing. We are working with the city attorney and our attorney to only tax the active dispensary space and not where the social services are given.” 

All the dispensaries, Reiman said, were interested in seeing the community prosper. 

“We just don’t want to see red tape get in their way,” she said.