There are very few cannabis dispensaries in West Los Angeles nearly two years after recreational legalization.
By Sam Catanzaro
On November 8, 2016, California voters approved Proposition 64, also known as the Adult Use of Marijuana Act (AUMA), legalizing the possession and retail sales of cannabis.
Nearly two years after the passage of Prop 64 there remain very few commercial shops in West Los Angeles, and according to Weedmaps, there are zero recreational storefronts in Century City.
There are, however, a handful of cannabis shops opening throughout West Los Angeles that are looking to attract customers from Century City.
“It would be great to be able to serve the corporate clientele working out of the Century City area,” said Nick Danias, a managing partner at Cannary West, a recreational marijuana shop that recently opened in West Los Angeles.
In addition to a lengthy permitting process, part of the reason there has been a slow start to this industry on the Westside is the cost of retail space in the area, especially for an industry that already faces high state taxes. In an acknowledgment to these high taxes, the Los Angeles City Council pulled a measure that was set to appear on the November ballot that would have asked voters to approve or reject a 1 percent reinvestment tax on all cannabis purchases.
“The City wishes to add an additional gross receipts tax on those who engage in the commercialization of nonmedical and medical cannabis,” wrote the Los Angeles City Attorney’s Office in a report to City Council.
The measure was pulled and replaced by an order for City Staff to report back to Council in 45 days on how Los Angeles could fund its Department of Cannabis Regulation and efforts to combat the criminal cannabis market.
This tax had the potential to raise approximately $30 million annually to fund specifically public improvements near cannabis businesses, cannabis enforcement, outreach and social equity programs and youth educational programs. Rafael Gonzales, Director of Community Relations at First 5 LA – a nonprofit child-advocacy organization – says that this tax would have had a positive impact on children in the city.
“For First 5 LA, a focus on early childhood development and the opportunity to fund these programs at a sufficient level, will have a meaningful impact on the lives of children and families throughout Los Angeles,” Gonzales wrote in a letter to City Council.
Proceeds from this tax would have been deposited in a “Cannabis Reinvestment Trust” and would fund specific types of projects with 50 percent funding public improvements and youth outreach within a one-mile radius of any cannabis retailer.
Despite the tax’s potential to fund these critical programs, the cannabis industry applauded the City’s decision to pull the tax from the November ballot, worrying that such a tax in Los Angeles could stifle marijuana retailers in the City, especially in areas like Century City where rents are so high.
“While I understand the need for the state to generate tax dollars, it’s extremely hard on an entrepreneur. Keep in mind while they are taxed more than most businesses, they don’t receive any state incentives and tax breaks like other businesses,” said Stormy Simon, a Cannabis Advocate.
Simon, who serves on the Advisory Board for CannaKids, KIND Financial and is a Director on the Board of High Times, argues that if the City levied an additional tax on cannabis retailers, who are already paying high state taxes, consumers would have likely be hit with higher prices.
“We should all ask, when we the people vote and pass laws, should the government be able to impose taxes so high, that businesses may fail or so that consumers can’t afford it?,” Daniels said “Currently the tax rates are climbing high in cannabis, we should all be pushing back a little bit.”
Nick Danias, the partner at Cannary West, told Century City News that cannabis consumers cannot afford additional taxes, considering the 29 percent in sales and excise tax they are already charged.
“This is making it difficult to afford,” Danias said. “To see that dollar amount further increase may negatively impact those who genuinely need cannabis for their pain management.”
While the tax has been pulled for the November ballot, City Council’s initial approval for the tax shows a desire on their part to tax the cannabis industry and may likely consider a similar tax again in the future.