Pot? Check. Taxes. Check. Step Three: Profit.

San Jose took a step toward welcoming medical cannabis into its fair city on Tuesday night — 14 years after state voters approved medical cannabis, six months after pot clinics began sprouting up in Northern California’s largest city and about five months after a city council member openly declared the cash-strapped burg ought to do something about it all: namely, start taxing.

Via a 7-3 vote last night, the council essentially said, “Yes, we ought to do something about it, and we will — in June, when city staff comes back to us with a regulation and taxation plan that they’ll spend the next few months concocting.” Not exactly words to foment a revolution — but for those who’d like to see green generating green in San Jose, it’s a good day. “San Jose took a pragmatic step,” Councilmember Pierluigi Oliverio said Wednesday. “We said, ‘We want a limited number of dispensaries in limited places, and we want them taxed.'”

Pot? Check. Taxes. Check. Step three: Profit.

Nothing left now but the wrangling over the details: minor points like what the business tax levied on dispensaries should be; if they should be restricted to industrial space in San Jose;  if there should be a strict cap on the number of dispensaries; if the permitting fee should be $10,000 or $30,000 per dispensary.

Wait, those are all major points, some with the ability to muck up the process entirely, said Lauren Vazquez of the Silicon Valley chapter of Americans for Safe Access. Lengthy haranguing over just those details is partially to blame for the drawn-out saga of dispensary regulation in Los Angeles, now at two years and counting. Did you ever think it’d be the marijuana advocates getting all serious and killing the buzz?

“We want to make sure [patients] are involved in the drafting process,” she said. “That way we can get an ordinance that’s reasonable, not too restrictive, and we’ll avoid a lot of the going back and forth.”

Vazquez listed the following as potential dealbreakers:

  • An arbitrary cap on the number of dispensaries;
  • Dispensaries restricted to industrial areas, which lack public transportation;
  • Excessive permitting fees or businesses taxes (a 3 percent receipts tax on San Jose dispensaries has been suggested);
  • Proceeds from pot taxes going to fund major unrelated city projects.

Problem is, most of these are to be found in the business models Oliverio and his colleagues have instructed city staff to follow when crafting San Jose’s ordinance. Oakland has a cap of four dispensaries and a business tax of 1.8 percent, for example.

In the meantime, Vazquez expects San Jose’s estimated 35 brick-and-mortar dispensaries expect to continue operating as they have before — with no regulation or taxation. Some have received cease-and-desist notices from the city threatening $2,500-per-day fines, but “I am not aware of anyone actually receiving a fine or closing down,” she said.

In other words, smoke ’em if you got ’em.


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