Measure N: Taxing Recreational Marijuana

San Diego, CALIF.- The push to tax pot could be a big money generator for the city of San Diego if a statewide proposition passes.

If California voters approve Proposition 64, which would make it legal for adults to use marijuana, Measure N, if it passes, would impose a sales tax on businesses that sell marijuana for recreational use.

Councilman Kersey’s measure dictates that the tax would begin at 5 percent and increase to 8 percent in 2019. At that time the City Council could adjust the tax higher, but never rise above 15 percent. The revenue would go into the city’s general fund.

Kersey argued the genesis for Measure N was dictated by code enforcement and public safety. The state measure could also levy its own 15 percent sales tax on marijuana, but Kersey said the city should make sure a local tax would take care of expenses related to regulating the drug.

Advocates, like the United Marijuana Medical Coalition, cautioned against setting the rate too high. At the rules committee and City Council hearings, the UMMC stated a higher rate could make it harder for legitimate businesses to compete with black-market sellers.

The city’s independent budget analyst estimates a 5 percent tax could raise around $22 million a year. A number that is admittedly dependent on a number of variables, like how easy the city makes it to open a recreational marijuana dispensary, the price of recreational marijuana and its availability in other markets.