Medical Cannabis: Taxation, Regulation, and Misinformation

 

Here’s a question for Vallejo voters, particularly if you are among the 14,000 who voted for Measure C in 2011 to help fill the gaping hole in our city budgets by taxing medical marijuana dispensaries at ten percent of gross sales on top of normal sales tax.  How should voters respond when politicians tell us one thing as candidates and then say and do something completely different once they are in office?  The 2013 Jump Start candidates, who as Councilmembers have backed the mayor’s wasteful and futile moralistic crusade against responsible taxpaying businesses, were all asked to take a position on Measure C during the campaign.

On October 3, 2013 they appeared at a candidates forum seeking the backing of the local Democratic party.  Their public statements at the time stand in stark contrast to the actions they have taken since the election.  Quotes from the forum give the tenor of the Jump Start political promises made to voters when asked about Measure C.

Pippin Dew-Costa declared her support: “It’s important for the success of this Measure to make sure that there’s consistency in the policy of the regulation of these dispensaries.”  Jesus Malgapo stated unequivocally: “You know, we allow dispensaries to operate in Vallejo,” and “We take the money that is coming in now to help the city...”   Rozzana Verder-Aliga sounded very concerned with making sure the playing field is level and seeing that the city collects all the revenue mandated by voters.  “We want to know if they are really paying their taxes - who is paying and who is not paying.  I know that the sales of medical marijuana is substantial so the tax should also be substantial and that would help...our deficits.”  She went on to suggest devoting city staff to collecting Measure C taxes “just like we’re collecting water bills, right?”

Watch them talk about all the things they failed to do once elected:

That all sounds great, doesn’t it?  Sounded like voters would finally get what they voted for in 2011 if we just put these people in office.  Wrong.  Once the election was over all three who won office got in line behind our mayor, who seems to think that his personal moral belief system should trump the collective voice of 14,000 voters who went to the polls and approved Measure C by more than three to one. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Measure C issue is straightforward.  It was a tax measure and didn't set up a regulatory framework, as the Mayor is fond of pointing out.  The city charter is perfectly clear on what should have happened once it passed.  Section 706 of the Vallejo City Charter says:  "The Council shall provide by ordinance for the collection of all taxes and revenues due the City, either under the direction of the city manager..."   No confusion there, voters direct the City to collect the tax and it's the Council's job to develop and implement the regulatory ordinance to make the tax collection happen.

 

Instead, the Council voted to declare an emergency moratorium, which is allowed under California code for ninety days when a legislative body has an emergency situation that it needs additional time to study before putting a regulatory framework in place. The emergency used to justify the action was fear that crime might be associated with dispensaries.  That argument relied on a debunked and outdated 1999 police chief's association paper.

 

But the Council failed to take any action to study the issue or attempt to determine what extra security regulations should be implemented.  Instead they kicked the can down the road by extending the moratorium for a year, and then another year.  That is most certainly not allowed under the code, because declaring a moratorium and then taking no action is an admission that there is no emergency, which is necessary to justify a moratorium in the first place.  Meanwhile they did absolutely nothing about the regulatory vacuum being exploited by dispensaries that continued to open without paying any taxes at all.

   
We know before they stopped collecting taxes altogether the city was receiving $750,000 per year in Measure C taxes.  This money was coming in despite the fact that the city never established any system for collection.  This was just the responsible dispensary owners trying to keep faith with voters and do the right thing.  That tax money was coming from only eleven or twelve of them, and who knows how good their bookkeeping was?  Certainly not the city.  By the city's own admission their failure to regulate or take any action to stop the proliferation had led to some 44 clubs actually operating in town.  A rough calculation of lost revenue over the course of four years of legislative neglect would conservatively put the loss  to taxpayeres at three million dollars give or take.


We understand that many who came of age under prohibition with the relentless drug war propaganda are not yet comfortable with cannabis use, but it’s time to get over it.   There are far too many of us now who know the truth through personal experience, and those who cling to the tired, simplistic ‘dope’ dogma find themselves today distinctly in the minority.   We freely issue alcohol permits all over town and the social costs of alcohol use are orders of magnitude greater, while the benefits and tax revenue are far less than medical cannabis.

In addition to fear mongering about a nonexistent association with crime, the perception that the presence of dispensaries would encourage teen drug use has been troubling for many.   The idea that we can effectively restrict the availability of cannabis products to teens with a policy of prohibition denies a reality that has been in place for many decades.  A medical marijuana edible package turning up in a high school  just means a parent was not careful enough with their medication, a common problem with a great many pharmaceuticals.  It doesn’t mean a student would have had any difficulty finding illegal cannabis from a different source.  In fact they would have little trouble at all.

We no longer need to speculate about whether medical marijuana dispensaries or total statewide recreational legalization will lead to an increase in teen marijuana use.  We now have hard data and peer reviewed statistical analysis revealing that it does not.  A series of studies, including data from cities in California, show no increase at all in cities and states where some form of legalization has been put in place. 

 

The latest of these was published in the major psychiatric journal in June.  A reporter for Forbes sums up the results as follows: “This exhaustive study using over 24 years of data from over a million teenagers in 48 states found no evidence that legalized medical marijuana led to teenagers using pot more."  Debating a failed policy of prohibition only keeps us from addressing the real reasons for adolescent drug use and how to prevent it, which we all can agree should be a public policy goal.  

Legalization of cannabis use for any purpose is clearly coming soon to California, as even the council majority openly acknowledges, and Vallejo should be getting ready.  Inaction limits options, an expensive lesson we should have learned many times over by now.  The locales that have been prepared in states where legalization has already occurred have seen a major influx of tax dollars.  To shut down well established dispensaries run by experienced and responsible managers at this juncture is breathtakingly foolish, especially when you told voters who trusted you that you would do something completely different.

Instead of fighting with these businesses, the city should assist in raising their standards of operation and provide clear guidelines to help them integrate into the community.  Instead of throwing resources at lawyers and referendums, the dispensaries could be investing in upgrading their buildings, hiring more people, and funding community benefit projects in addition to generating significant tax revenue for the general fund.  This is what voters had in mind when they went to the ballot box in 2011 and passed Measure C by an overwhelming margin.  

The 2011 council under the leadership of Mayor Davis failed to perform its basic ministerial and fiduciary duty to the taxpayers to implement the voter approved initiative.  The 2013 slate of Jump Start candidates failed to live up their campaign promises to fix it once they were in office.  It’s not OK to substitute your own cultural biases for the judgment of voters as an elected official. 

 

Once an issue appears on a ballot in an open election the matter is settled.  There is no higher authority than the voters, and when a ballot Measure is approved we move to the implementation phase.  Period.  It is our responsibility as voters to hold elected officials accountable when they lose track of their proper role and democracy runs off the rails.