- Posted by Maria Belyi
- On March 21, 2017
- breaking, cannabis, cannabis law, Cannabis License, Cannabusiness, CETRA, city of Los Angeles, dispensary, EMMD, los angeles, Measure M, medical cannabis, Ordinance 184501, taxation
On March 7, 2017, the citizens of Los Angeles overwhelmingly approved Measure M, also known as the Los Angeles Cannabis Enforcement, Taxation, and Regulation Act (CETRA) or Ordinance 184501. CETRA repeals Proposition D, which was passed by the voters in 2013. Proposition D limited the amount of dispensaries within the City of Los Angeles to 135, and provided them with a limited immunity. In enacting CERTA, the citizens of Los Angeles demonstrated their willingness for the Cannabis market in Los Angeles to expand, while the City benefits from the influx of tax revenue.
CETRA authorizes the Los Angeles City Council to adopt a Cannabis regulatory process and structure by September 30, 2017. Prior to the adoption of any structure, the City will convene public hearings that will include input from neighborhood councils, law enforcement, school officials, civic and service organizations, and Cannabis related industries, among others. Information on when the meetings will be held can be found online. In enacting new policies, the City will allow existing medical marijuana dispensaries (designated in the ordinance as EMMDs) that can demonstrate compliance with Proposition D, limited immunity and tax provisions to continue operating and give them priority in processing their applications.
Further, CETRA establishes a new tax structure for commercial and medicinal Cannabis businesses. Beginning on January 1, 2018, commercial Cannabis businesses will be taxed $100 for every $1,000 of gross receipts from Cannabis and Cannabis product sales (or a fractional part thereof), $10 for every $1,000 of gross receipts for transporting, testing, or researching Cannabis or Cannabis products (or a fractional part thereof), and $20 for every $1,000 of gross receipts for manufacturing or cultivating Cannabis or Cannabis products (or a fractional part thereof).
With medical Cannabis, those with a medical Cannabis business will be taxed $50 for every $1,000 in gross receipts for sales of medical Cannabis, or a fractional part thereof.
Notably, CERTA allows for the businesses to be regulated and makes it a misdemeanor for any person operating a medical or nonmedical Cannabis business to maintain or display a business tax registration certificate for any classification other than what is applicable to the business or to maintain or display an expired, suspended, or otherwise invalid business tax registration certificate. Further, CERTA designates as a nuisance and misdemeanor the participation in medical and nonmedical Cannabis activity without a license. In other words, operating a Cannabis establishment may subject a person to a restraining order or injunction with monetary civil penalties, misdemeanor criminal prosecution, and having water and power cut off by the Department of Water and Power. Those who are employed or volunteer at a non-licensed Cannabis establishment, or lease or rent land to those establishments are subject to these same punishments.
While the full impact of Los Angeles’s citizenry’s shift in perspective on Cannabis businesses remains to be seen, the passage of Measure M will certainly allow for the City to benefit from easier access to Cannabis and higher tax revenues for the City.
If you have any further questions about the impact Measure M can have on your Cannabis business, or are otherwise interested in Cannabis Business, please contact CannaBusinessLaw for expert assistance in compliance with Cannabis licensing, permitting and the application process relating to commercial Cannabis.