Capitol Alert

California senator proposes 15 percent medical marijuana sales tax

Marijuana grower Basil McMahon with his crop in Grass Valley, Calif., on Nov. 12, 2015.
Marijuana grower Basil McMahon with his crop in Grass Valley, Calif., on Nov. 12, 2015. The Sacramento Bee file

With the potential for hundreds of millions of dollars in new revenue on the table, California lawmakers are pursuing a 15 percent medical marijuana sales tax.

Sen. Mike McGuire, D-Healdsburg, on Wednesday introduced legislation to set a statewide assessment; local jurisdictions would still be allowed to pass their own additional sales taxes.

McGuire said he was committed to following long-awaited regulations approved by legislators in the final days of session last September, nearly two decades after voters first legalized medical marijuana, with a funding source for the enforcement structure the law created.

“We know these dollars will be put to strengthening our communities,” he said.

Annual sales of medical marijuana are estimated at more than $1 billion in California, according to McGuire, meaning that his tax could bring in more than $150 million for the state. It would be divided primarily between the general fund and grants for local oversight agencies, with some money for state parks, environmental restoration projects on land damaged by illegal marijuana cultivation, and county drug and alcohol treatment programs.

The 15 percent tax mirrors what proponents of a leading initiative to legalize recreational pot have included in their November measure. McGuire pointed to the experience of Colorado, where the number of medical marijuana patients actually increased after voters legalized recreational use of the drug in 2012 because they paid a lower tax rate.

“The identical tax rate has worked best,” he said.

McGuire’s bill needs a two-thirds vote in the Legislature, which will require at least some Republicans, who are usually unwilling to support tax increases. Both the Senate and Assembly Republican caucuses declined to comment on the proposal; however, many of their members joined with Democrats to pass the medical marijuana bills last year.

Assemblywoman Melissa Melendez, R-Lake Elsinore, who did not vote for the regulations, said lawmakers might be reluctant to tax something that people rely on as medicine.

“I anticipate that it will be a difficult choice for members of both parties,” she said.

But McGuire said taxes have not hindered patients’ access to medical marijuana in Colorado and Washington, which also legalized recreation pot in 2012. He added that there is a difference between federally regulated prescription drugs, which are not taxed, and medical marijuana, which doctors can only recommend.

“I’m not saying it’s right, but there has to be a clear distinction,” he said.

Alexei Koseff: 916-321-5236, @akoseff

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