New Business Tax License Hurdles for L.A. Collectives

[dropcap class=”kp-dropcap”]T[/dropcap]uesday, January 19, Los Angeles City Council Members voted unanimously to halt the issuance of tax certificates indefinitely for any “medical marijuana collective business activity.” This decision came after a complaint issued in 2014 that was readdressed by city officials in September of last year, urging the Office of Finance to stop issuing business tax licenses to illegally run collectives. This movement was backed strongly by Councilwoman Nury Martinez, who felt that issuance of business tax licenses prevented her from successfully shutting down collectives in her district.

Although Proposition D which, passed in 2013, only allowed 135 collectives to operate in Los Angeles, the current amount is significantly above that limit. Office of Finance Assistant Director Ed Cabrera stated that so far, 1,105 collectives have registered with the city of Los Angeles. However, the Office of Finance stated that determining whether or not collectives met Proposition D standards was out of their jurisdiction, and that it was up to city attorneys to determine whether or not a collective is legitimate, according to Los Angeles Daily News.

While 447 collectives operating in Los Angeles garnered the city $4.4 million in taxes at the end of 2015, only 100 of those collectives are believed to have been in compliance with Proposition D. City officials feel that collecting on illegally run operations, which they are attempting to shut down, would send a mixed message to the public. Their solution is to halt the issuance of new tax certificates, require collectives to fill out an affidavit proving that they are in compliance with Proposition D and changing the appearance of new licenses to prevent illegally operating shops to remain open, as reported by CBSLA.

According to Councilman Joe Buscaino, any medical cannabis collectives running in compliance with Proposition D should have been registered by September 2007, so collectives must now prove that they meet this requirement. If a collective is found to have filled out an affidavit for a new business tax license under false terms, or found operating with an expired license, they will be charged with a misdemeanor. As for the change in the appearance of the tax certificates, Councilman Marqueece Harris-Dawson expressed that the original tax certificates helped collectives convince landlords that they are a legitimate business, elaborating that maintaining a tax certificate does not mean a business is legal, only that they have applied to pay city taxes.

Although the City Council successfully approved of the ordinance, the movement needs approval by Mayor Eric Garcetti to come into effect.