October 26, 2016

Rules Committee Puts Forth Recommendations For City To Draft Ballot Measure For March, 2017

Today the City of Los Angeles Rules Committee unveiled a framework of recommendations to place a City sponsored measure on the March, 2017 ballot.

The recommendation was to prepare an election ordinance, the “Cannabis Enforcement, Taxation, and Regulation Act” (entire document here) that asks the voters to authorize necessary tax and enforcement measures and grant the City Council the authority to subsequently develop a local cannabis regulatory framework. Highlights include:

Repeal Proposition D effective January 1, 2018

Return “authority to the City of Los Angeles to regulate all aspects of the cannabis industry immediately”

Levy criminal and civil fines for unlicensed cannabis business operating after certain dates

Levy criminal and civil fines for property owners leasing to unlicensed cannabis businesses after certain dates

Implement tax rates for cannabis-related businesses beginning January 1, 2018 as follows:

  • 5% gross receipts tax on medical cannabis sales\r\n\r\n10% gross receipts tax on recreational cannabis sales
  • 1% gross receipt tax on cannabis distribution, transportation, testing, or research businesses
  • 2% gross receipt tax on cannabis manufacturing, processing, or cultivation businesses
  • Discharges the Office of Finance with the administration of tax registration, collection, and auditing
  • Requests draft ballot ordinance from City Attorney no later than 2pm, Friday, November 4, 2016.

Also circulated at this meeting was a letter from Councilmember Bob Blumenfield, Third District (entire letter found here) asking that the ballot measure include a framework and deadline for development by the City Council “[t]o create a regulatory process and structure for the cultivation, processing, distribution and sale of marijuana products,” and “involve all stakeholders in the process of developing the rules, regulations and ordinances necessary to regulate the safe commercialization of marijuana.” Councilmember Blumenfield details a list of issues to be considered and resolved in this process, including:

  • Rules concerning who may qualify for a license
  • Regulation of transportation of cannabis in the City
  • Penalties and fines for unlicensed businesses
  • Zoning for all cannabis business types
  • Advertising rules

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