Los Angeles is mulling an unusual approach to funding a large-scale housing project aimed at reducing the city’s rate of homelessness – a tax on medical marijuana.
Earlier this month, city officials floated the idea of a 15 percent tax on cultivation and sale of medical marijuana.
It’s part of a series of nine proposals to help fund a $2 billion housing project the city recently approved to help reduce homelessness across the city.
“Even as our economy improves, we do not anticipate to have an additional $1.78 billion over the next 10 years to dedicate for this purpose,” Chief Administration Officer Miguel Santana told council members during a recent meeting.
City officials say it could generate nearly $17 million a year, far from enough to cover the costs of the project, though that number could increase if California voters decide to approve recreational marijuana later this year, Mashable reports.
“Marijuana is a new product in the marketplace and could be a significant source of new revenue,” says a recommendation in the proposal.
A number of other California cities have already adopted similar taxes on medical marijuana, including the municipalities of Riverside County, Santa Cruz, and Desert Hot Springs. The Los Angeles City Council will decide on the proposal by July.
If it’s approved, voters could see it on ballots either in November or in March.
L.A.’s housing project, which will be completed over ten years, will provide affordable housing and support services for residents, especially those who are chronically homeless.
More than 44,000 people are homeless in Los Angeles County, with the homeless population increasing 12 percent between 2013 and 2015, as The Christian Science Monitor reported in January.
But taxing medical marijuana could be controversial. Many patients strongly oppose taxing cannabis because they believe it creates an unfair burden on their decision to use a natural substance rather than prescription drugs to treat medical ailments.
They say taxing patients who take the drug to ease chronic pain could create economic hardships that drive many back to the black market.
“It will force people to go to the black market more," Dave Hodges, a proponent of recreational legalization who lives in San Jose, told LA Weekly. “You're talking a sin tax on people who are sick.”
The proposal is one of several other ideas to generate revenue for the project, including a plan to use General Obligation Bond that would let the city borrow the money and pay it back over 30 years, a billboard tax that could raise $24 million.
Another proposal calls for allowing developers to pay a fee to “opt out” of requirements that they build affordable housing units as part of new construction, with this fee then used to build affordable housing elsewhere. The city is also considered doubling the current tax on real estate sales, which could bring in an extra $167 million per year.