• BREAKING NEWS ABC shows live and on-demand -- Download the WATCH ABC app!

Medical marijuana sales tax Measure M passes

March 9, 2011 12:00:00 AM PST
Los Angeles voters approved a new pot tax Tuesday that could raise millions of dollars for the city. But some say accepting the money could be risky business.

Desperate for cash, the city of Los Angeles will soon have a new revenue stream.

Voters have approved the so-called "pot tax" known as Measure M. The measure passed with 59 percent of the vote.

It allows Los Angeles to collect $50 in taxes for every thousand dollars collected by medical marijuana clinics. Some critics say the city may regret taking the money.

The city of Los Angeles now joins several other cities up and down the state that have voted to slap a tax on pot dispensaries.

The passage of measure means patients will pay an extra 5 percent tax for their medical marijuana.

"It's a cost of being legitimate and that is worth it," said Dave Warden, who operates a medical marijuana dispensary in Studio City.

Warden says after years for fighting for acceptance the tax is actually a positive step for the medical marijuana community.

"We want to be part of the mainstream," said Warden. "Mainstream organizations, nonprofits and businesses have to deal with taxes, regulations, and as the regulations get involved it becomes more official and accepted and that's what we want."

The measure will enable the cash-strapped city of Los Angeles to generate millions of dollars in revenue. L.A. City Councilwoman Janice Hahn, who initiated the ballot measure, says pot dispensaries are being asked to pay their fair share of taxes.

"Any kind of money that we can bring in to help shore up our budget gap I think is important," said Hahn. "It's going to go to help us save jobs. It's going to go help us keep our libraries open, to ensure vital city services."

In a statement, a spokesman for a medical marijuana advocacy group said: "Measure M puts an unfair burden on medical cannabis patients because it taxes 10 times higher than the next highest tax in the city. We don't think of that as a patient's fair share," wrote Don Duncan, California director of Americans for Access.

Some patients say they are willing to pay more.

"I think it's fine if it goes toward something good," said Chau Phan, a medical marijuana user. "I am down with it if it's actually going to help our city."

Hahn estimates that the marijuana tax will bring in at least $10 million in revenue.