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Voters Pass Pot Tax for Cash-Strapped City
Additional $300k Expected to Boost Oakland, Calif. Coffers
7/22/09|CBS News| News


Clerk Intermittent Chun Lin organizes ballots from
Oakland's mail-in election inside the Registrar of
Voters office on Tuesday in Oakland, Calif. Residents
approved a first-of-its kind measure that would impose
a new tax on medical marijuana sold at the city's four
dispensaries. (AP Photo/Sean Donnelly)

(CBS/ AP) Oakland residents overwhelmingly voted Tuesday to approve a first-of-its kind tax on medical marijuana sold at the city's four cannabis dispensaries.

Preliminary election results showed the measure passing with 80 percent of the vote, according to the Alameda County Registrar of Voters.

The dispensary tax was one of four measures in a vote-by-mail special election aimed at raising money for the cash-strapped city. All four measures won, but Measure F had the highest level of support.

Scheduled to take effect on New Year's Day, the measure created a special business tax rate for the pot clubs, which now pay the same $1.20 for every $1,000 in gross sales applied to all retail businesses. The new rate will be $18.

Oakland's auditor estimates that based on annual sales of $17.5 million for the four clubs, it will generate an estimated $294,000 for city coffers in its first year.

For complete coverage on the legalization and taxation of marijuana, go to CBSNews.com's special report Marijuana Nation

Pot club owners, who openly sell pot over the counter under the 1996 state ballot measure that legalized medical marijuana use in California, proposed Measure F as a way to further legitimize their establishments.

"It's good business and good for the community," said Richard Lee, who owns the Coffee Shop SR-71 dispensary and Oaksterdam University, a trade school for budding dispensary workers.

The measure had no formal opposition; in November 2004, a ballot initiative that required Oakland police to make arresting adults using marijuana for personal use their lowest priority passed with 63 percent of the vote.

Support for Measure F was expected to be just as strong. As a result and given the mail-in nature of the election, there was little campaign activity, according to Lee.

"We put out signs, but outside of that it's been pretty low-key," said Lee, who hosted a victory party at Oaksterdam University's Student Union building in downtown Oakland.

Although California's 800 or so pot clubs also are expected to pay state sales tax, Oakland is the first city in the country to create a special tax on marijuana sales.

Advocates of legalizing pot for recreational use hope to use Oakland's experience with Measure F to persuade California voters next year to approve a measure that would legalize and regulate marijuana like alcohol.