OAKLAND -- Voters across the state may have not been willing to legalize cannabis for recreational use, but in Oakland they overwhelming supported tripling sales taxes on the medical variety of the plant.
Measure V, a proposal to triple the tax on medical cannabis businesses in the city, won by a wide margin -- getting nearly 70 percent of the vote.
That means medical cannabis businesses will now pay $50 in taxes for every $1,000 in gross receipts.
The new rate of 5 percent is nearly three times the supplemental sales tax rate they already pay and could add more than $1 million to Oakland's general fund, according to supporters.
The measure also included a new "Non-Medical Cannabis Business Tax" of $100 per $1,000 of gross receipts that would have kicked in if voters had approved the California-wide Proposition 19, which sought to legalize recreational marijuana use. Instead, the proposition went down to defeat early Tuesday evening.
Despite the wide margin, Measure V was not without controversy among the medical marijuana industry. Opponents argued that at $50, the hike would result in service cuts to patients. The new rate would be the highest in the region, and double the 2.5 percent proposed by Berkeley, Albany and Richmond.
But the measure represents a possible $1.4 million windfall in new taxes for Oakland. That figure is based on the $28 million in sales that Oakland's four dispensaries were expected to produce in 2010. Currently there are three permitted dispensaries in Oakland. That number could rise to as many as eight this year if City Council members approve permitting additional dispensaries.
The money from Measure V would help pay for the costs to the city of overseeing those dispensaries.
Oakland Councilmember Larry Reid, who originally proposed a higher tax, has dismissed worries that 5 percent would drive the dispensaries out of Oakland. He said profits were sufficient to support the tax. Others said falling prices of cannabis would make up for the higher tax rate.