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Mayor Bob Filner recently released proposed guidelines for how and where people could access medical marijuana and prominent among them was a new 2 percent sales tax on the drug.

Let me be clear, he calls it an “excise tax on all medical marijuana dispensary sales.”

Since then, almost every day, I’ve asked his office: How are you going implement that?

I never got an answer. I got a bunch of “working on its” and “checking” but never a response.

It’s likely that they just don’t know. To say it’s unclear is not to do it justice.

You see, marijuana isn’t really a product that gets sold. And excise taxes aren’t really something you can levy on sales. And it doesn’t seem like they could do any of this without a vote of the people.

Let’s start from the beginning. Marijuana is not being purchased or sold. State law allows marijuana collectives to distribute the drug to their members. And they are allowed to collect money from their members. But that money is typically called a donation.

Now, the state Board of Equalization has determined that this revenue can be taxed with a sales tax.

How you tax a donation is just the first awkward thing.

The next is that the city is not allowed to raise taxes on anything without a vote of the people. As Filner constantly reminds us, this is his complaint about the 2 percent surcharge on hotel room bills. He says it is illegal because it was not approved by voters.

This would be illegal without a vote as well.

Ernie Dronenburg, the San Diego County assessor who also sat on the state Board of Equalization for many years, said there would have to be a vote.

A top anti-tax advocate agreed.

“No matter what they do, it’d have to be put up for a vote,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association.

That’s the second awkward thing. The mayor didn’t tell us he was going for a vote of the people.

That brings us to the third awkward aspect of the plan: The mayor says this would be an “excise tax on all medical marijuana dispensary sales.”

Which is it? An excise tax is charged before a good is sold. So, for instance, there’s an excise tax on cigarettes. But it is built into the price of the cigarette, on top of which they add a sales tax.

Dronenburg said it has to be either an excise tax or a sales tax. If it’s an added sales tax, then the city’s going to have problems. A city can vote to raise a sales tax rate, but it can’t vote to raise the sales tax on one product. The tax base has to remain uniform with the state.

And if it’s an excise tax, then it can’t be based on sales.

“If it’s based on gross receipts then it’s a sales tax and they wouldn’t let them do it,” Dronenburg said.

The city of San Jose somehow did. Voters passed a “gross receipts tax” on marijuana storefronts of 7 percent, which it collects itself. (It’s getting challenged by one vociferous distributor who says there’s no product being sold so it can’t be taxed. Oy vey.)

I asked the state controller’s office, which referred me to the Board of Equalization, which referred me to the city.

Thus, I’ve been asking day after day for an answer to this simple puzzle: Through what vehicle might the mayor create a 2 percent tax on marijuana? Is he proposing a vote?

The Patient Care Association of California estimated (based on an average “purchase” at a dispensary of $45), that marijuana collectives had $206 million a year when they were operating all over town. A 2 percent tax would be real money.

So, Mr. Mayor, how are you going to do that?


They could take a page from the hotel owners. The marijuana collectives could create a business improvement district, the Marijuana Marketing District, and pass a special 2 percent “self-assessment” that just happens to end up on your marijuana receipt. But, in that case, the money would only be allowed to benefit marijuana dispensaries in order for it to be legal.

(Apparently someone made this joke already. Drat!)

Or it could follow the other hotelier innovation, the one that will fund a vast expansion of the Convention Center.

They’re doing that through the Mello Roos taxing vehicle — a tax hike on property. Even though it’s a property tax, it’s based on how much revenue the hotels bring in.

Yeah, mind-blowing stuff. In the end, it’s just a line item on hotel bills like a regular old tax. This vehicle offers a roadmap for all kinds of consumer taxes — a way to avoid the requirement that these taxes go to a vote of the people.

Welcome to the Marijuana Access Facilities District, or MAFD. Sure, there are some hurdles. Marijuana dispensaries will need to buy their buildings, for one. But crazier workarounds have been carried out.

Leave it, however, to the anti-taxers to mess with our fun. Coupal, from the Howard Jarvis Taxpayers Association, said he wasn’t so sure about that hotel “fee” either.

“I don’t see how they can do this without voter approval,” he said.

Join the club.

I’m Scott Lewis, the CEO of Voice of San Diego. Please contact me if you’d like at or 619.325.0527 and follow me on Twitter (it’s a blast!):

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Scott Lewis

Scott Lewis oversees Voice of San Diego’s operations, website and daily functions as Editor in Chief. He also writes about local politics, where he frequently...

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