When medical marijuana collectives, patients and labor leaders rallied to successfully overturn San Jose’s medical marijuana ordinance in February, many viewed it as a victory for California’s unofficial Green Party.
But fast-forward a couple months since that defeat, or even a year after the Marijuana Business Tax (MBT) went into effect, and it appears the city of San Jose has started to get a handle on semi-legalization. A memo put out on 4/20—city staff swears it was just a coincidence—states that more than $3.16 million in taxes was collected between March 2011 and the end of February this year. (That includes $61,000 in late penalties and $3,000 in interest.)
But the city still staunchly insists that: 1. Officials have spent more time, which equals money, on collectives than it’s worth to regulate (although no running tally of hours is kept). 2. Collectives are illegal.
No doubt, the dollars coming in ease the city’s conscience.
“The best example of that (second point) is to think about Al Capone and the IRS,’ says Angelique Gaeta, an assistant city manager for San Jose, who cites the infamous Chicago mobster who ran afoul of the law yet was held responsible for the taxes he owed on money made illegally. “It’s a gross receipts tax; it’s not a sales tax,’ she adds. “Anything traded, bartered, anything of value, there is a tax on it.’
Meanwhile, as money goes into the city’s coffers, enforcement efforts are slowly starting to slash and burn undesirable pot clubs off the ever-fluctuating list of dispensaries. Over an 18-month period ending Valentine’s Day this year, the city says it received 77 complaints ranging from improper signage and building/zoning infractions to loitering and illegal drug sales.
The city went about contacting the various collectives in four ways: warning letters were sent to five collectives; administrative citations were issued to four clubs; compliance orders were sent to three dispensaries; and the city attorney’s office opened case files on four others.
“Our goal here is to protect our community, and public nuisance and compliance are two aspects of that,’ says David Vossbrink, the city’s communications director.
Four collectives closed not long after the city opened case files, including MedEx on Senter Road because it was located too close to a school. Two other dispensaries have plans to shut down by June, Gaeta’s memo says.
One collective, however, which the city did not release the name of, has not responded to a warning letter and compliance order from the city, and an inspection warrant is in the process of being obtained by the city attorney’s office.
While the city believes that some collectives are skirting the MBT by reporting $0 on their monthly tax statements, Deputy DA Jim Sibley, who oversees the county’s drug prosecutions, says his office has no plans to prosecute collectives that refuse to pay the tax. Since releasing a new medical marijuana protocol last year, Santa Clara County has one of the more progressive approaches to working with collectives to keep them in compliance with state law.
“I know there’s certain dispensaries that have taken that position that they’re operating in compliance and don’t need to pay the tax. Whether it’s a legal or political position, I don’t know how you categorize it,’ Sibley says. “The fact that they do or don’t pay, it doesn’t make it more or less criminal.’
