Overview

Measure CB is set to be voted on during the primary election in Los Angeles on June 2. This measure aims to impose taxes on illegal cannabis businesses, aligning their tax obligations with those of legal cannabis operators. Proponents believe this will create a fairer market and generate significant revenue for the city.

Currently, illegal cannabis businesses benefit from not having to pay taxes or fees, giving them an unfair advantage over their legal counterparts. The measure is designed to address this disparity while also providing much-needed funds for city services.

Key details

  • Measure CB will tax illegal cannabis businesses at the same rates as legal ones.
  • The proposed tax rates include 10% on cannabis sales, 5% on medical cannabis sales, and 2% on manufacturing, cultivation, or other commercialization.
  • Proponents argue that the measure could generate between $30 million to $35 million annually for city services.
  • Potential uses for the generated revenue include street and sidewalk repairs, 911 emergency response, fire protection, and parks maintenance.
  • It is estimated that the illegal cannabis market in L.A. is roughly equivalent in size to the legal market, according to a report from the city’s Office of Finance.
  • Opponents of Measure CB believe it may inadvertently normalize illegal businesses and create a financial incentive for the city to maintain their operations.
  • The City Council voted in favor of placing Measure CB on the ballot with a vote of 10-2.
  • Supporters, including Councilmember Katy Yaroslavsky, argue that the current lack of taxation for illegal businesses is a loophole that needs to be closed.
  • As illegal businesses are shut down, the estimated revenue from the measure may decrease.
  • Measure CB could also serve as a tool for the city to enforce closures of illegal businesses that do not comply with tax regulations.
  • The primary election, where Measure CB will be voted on, is scheduled for June 2.

Context

The introduction of Measure CB comes amid ongoing challenges in regulating the cannabis market in Los Angeles, where illegal operations continue to thrive due to their exemption from taxes and fees, creating an uneven playing field for compliant businesses.

What happens next

If Measure CB is approved by voters, the city will implement the new tax structure for illegal cannabis businesses, potentially leading to increased revenue and enhanced efforts to close down non-compliant operations.

What we don't know yet

It is unclear how many illegal cannabis businesses currently operate in Los Angeles and the exact impact of the measure on these businesses if it is passed.