[420 Girl]

The proposed increase in the cannabis tax rate that was approved by an Oakland City Council committee on Tuesday may not bring in millions to the city, as was previously assumed.

The increase would put the tax rate for cannabis at $12 or $24 per $1,000 in gross receipts -- 10 to 20 times more than it is today. Using 2007 numbers from the four licensed cannabis dispensaries in the city, the city council estimated that the tax would bring in an additional $200,000 to $400,000 in revenue to the city annually.

However, Councilwoman Nancy Nadel said in an interview on March 30 that the dispensaries were estimating that 2008 revenue was much larger, and she said that the tax rate increase could bring in “a couple million” to the city. But the dispensaries may have been overly optimistic. Xiaojing Wang, policy analyst in Nadel's office, said that the increase in 2008 was not that significant.

In 2007, the dispensaries’ gross receipts were $17,917,560. In 2008, the receipts were $21,177,482 -- which would mean about $250,000 to $500,000 in additional revenue.

But that doesn’t necessarily mean that the revenue prospects won’t increase. Councilwoman Nadel said that since U.S. Attorney General Eric Holder announced that the federal government would not be prosecuting legal medical marijuana dispensaries, applications for cannabis ID cards have increased, meaning demand for medical marijuana could be going up as well.

The proposal will go in front of the entire Oakland City Council later this month, but since it requires the creation of a new tax classification, it also has to be approved by the voters.


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