"It's like taxing alcohol, tobacco, this is just another commodity that we're regulating through an ordinance in terms of how it can be sold, when it can be sold, where it can be sold," said L.A. City Councilwoman Janice Hahn.
At Lankershim Caregiver in North Hollywood, owner Drew Milburn said he's in favor of the tax. He says he's following the law and wants to work with the city.
"There's a lot of us who are very concerned about trying to make this the most legitimate business that it can possibly be, and generating capital for the city makes good sense," he said.
Sacramento lawmakers are also considering a bill to tax and regulate all marijuana.
According to a newly released report by the State Board of Equalization, marijuana retail sales would produce an estimated $1.4 billion in new revenue: $990 million would come from a $50-per-ounce fee, while another $392 million would be generated from sales taxes.
The bill would allow adults 21 and older to legally possess, grow and sell marijuana.
San Francisco Democratic Assemblyman Tom Ammiano, who introduced the bill, calls it an effective way to help bridge the state's $26.3 billion budget shortfall.
"It defies reason to propose closing parks and eliminating vital services for the poor while this potential revenue is available," Ammiano said in a statement.
Under the bill's current language, the state could not begin collecting taxes until the federal government legalizes marijuana. A spokesperson says Ammiano plans to amend the bill to remove that provision.
California and the federal government have clashed often since state voters passed a ballot measure in 1996 legalizing marijuana for medical use.
The Associated Press contributed to this story.