LA passes Prop M. Four Things You Need to Know
The day before the International Women’s Day, 79.4% of Los Angeles voters approved Proposition M.
The newly adopted measure allows the Los Angeles Mayor and City Council to oversee commercial cannabis. Years of the controversial policies, sporadic raids, and the tense relationship came to an end. LA marijuana industry finally got legal.
Prop M sets tax rates and regulations for:
- marijuana sales;
- other operations related to cannabis.
The market is expected to generate tens of millions of dollars for Los Angeles next year. The regulations were developed by the joint effort of:
- UCBA Trade Association (formed by 63 LA dispensaries in 2015);
- L.A. City Council;
- cannabis industry leaders;
- government officials;
As a result, Prop M introduced a sensible taxation policy and gained the wide support of LA voters.
Here four things you need to know about upcoming changes in LA:
1. New Taxes to Generate $50 Million
Prop M introduces new gross receipt taxes for every aspect of cannabis industry:
- Cannabis transportation, testing, and research – 1%;
- Manufacturing, cultivation and any other form of commercialization – 2%;
- Medical cannabis sales – 5%;
- Recreational cannabis sales – 10%.
In 2016, LA made more than $9 million in taxes at a rate of 6%. With rates established by Prop M, revenue is expected to blow up to $50 million in 2018. Due to cash-based approach in the cannabis business, the L.A.’s Office of Finance will have to implement a method for paying these taxes in cash.
2. The City To Control Illegal Business
Prop M aims at the development of the better enforcement strategies. The LA City Council and City Attorney will be able to punish any cannabis business that operates without City-issued license. For every day of violation:
- the offending business will be charged $20,000;
- each day will count as a new offense;
- if the business is renting property, the landlord will also be charged with $20,000;
- the City Council can shut water and electricity supplies to enforce compliance.
3. Legally Operating Dispensaries to Obtain New Licenses First
Currently, 135 dispensaries operate in Los Angeles under Prop D. Passed in 2013; the measure gave select dispensaries limited immunity to prosecution. These dispensaries have 60 days to apply for a new permit. On January 1, 2018, Prop M will entirely replace Prop D.
4. LA To Become The Largest Cannabis Market
The size of LA’s market is bigger than two Colorado markets, which makes it the largest marijuana market to regulate. There’s still some gaps in the rollout that need to be addressed. Public hearings will be held throughout 2017 to develop a strategy and regulations on transportation, appropriate advertising and police training for successful implementation of the measure.
An estimated deadline for a complete structure for regulation is September 30, 2017. The city begins its tremendous work under the scrutiny of the whole country. It is not surprising; the biggest market is about to be established. In the current political circumstances, a successful implementation of the project will be a huge win for cannabis advocates.