City Considers Levying Tax on Local Cannabis Dispensaries

Dispensary Proprietors Criticize Proposed $10 Per Square Foot Tax as Unfair, Unprecedented

Photo: A former chocolate factory may be the Berkeley Patients Group's new location, but it could cost them $280,000 a year in new taxes.
Skyler Reid/Staff
A former chocolate factory may be the Berkeley Patients Group's new location, but it could cost them $280,000 a year in new taxes.

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Aiming to help close the city's $12.2 million budget shortfall, the city of Berkeley is considering a new tax on local marijuana dispensaries that pot proprietors decry as unfair and arbitrary.

A proposal authored by City Attorney Zach Cowan and presented at a meeting of the city's Medical Cannabis Commission last month calls for a $10 per square foot tax on the city's cannabis dispensaries.

The proposal, which is still in preliminary draft form, was again discussed at the commission's meeting held Thursday.

"We need to raise money for the city," Cowan said. "Everyone is having a budget problem."

The proposal comes after the city gave the Berkeley Patients Group the go-ahead earlier this month to relocate to the roughly 28,000 square foot former Scharffen Berger Chocolate factory in West Berkeley. The dispensary uses its facilities for other forms of health care, including counseling, acupuncture, and massages, hence the need for extra space.

"The Berkeley Patients Group would most likely have to raise prices considering they'd be paying an extra $280,000 per year (in taxes)," said Erik Miller, store manager of the Berkeley Patients' Care Collective.

Miller said the tax would create significant additional expenses for cannabis clubs, who already pay a general business tax. He took issue with the city's $10 per square foot figure.

"It's insane if you think about it," he said. "There's no precedent whatsoever."

Last year, Oakland became the first city in the nation to tax marijuana sales at $18 per every $1,000 in gross sales, which was largely supported by voters and dispensaries in the area.

However, Berkeley's square foot tax has not gained the same traction among local cannabis providers.

"I don't like that tax at all," said Jim Squatter, a contributing founder of the Cannabis Buyers' Co-op of Berkeley. "We're non-profit, we provide a service to patients. This tax is hurting the people we want to help the most."

Officials from the Berkeley Patients Alliance, a coalition of the city's three medical cannabis providers, said they are coming up with alternatives to the city's proposal, which they will present to the commission.

A tax of only the square footage where cannabis is located within the dispensaries is one idea being considered, as is a tax on revenues, according to Jacob Linetsky, an attorney for the Berkeley Patients Group.

However, Linetsky said the alternative plans are still in preliminary stages and cannot be commented on at this time. Jacob Linetsky, an attorney for the Berkeley Patients Group.

In response to the complaints, Cowan said that concerns over the precedence of the tax are "beside the point."

"We need a whole lot more money than we're going to be able to raise through taxes anyway," Cowan said. "It's a matter of finding a number everyone can live with."


Contact Hailey Parish at [email protected]

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