San Jose Mayor Chuck Reed called Tuesday for the City Council to raise the tax on medical marijuana collectives from 7 percent to the maximum 10 percent to pay for a citywide vote on whether to repeal newly enacted pot regulations.

Reed had signaled that he wanted San Jose voters to decide the fate of regulations that city officials spent two years developing — rules he supported but which marijuana collectives call unworkable. But Tuesday was the first indication Reed wants the pot clubs to pay for an election, which Reed said could cost the cash-strapped city more than $1 million.

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“I propose that any city costs that may be associated with an election should be paid by the marijuana business industry,” Reed said in a memorandum Tuesday that will be considered at next Wednesday’s agenda-setting Rules and Open Government Committee.

Reed said he wants a tax increase voted on in January — and believes it should be temporary, noting that a yearlong increase would about cover an election’s $1 million cost.

Referendum leaders were dismayed by the mayor’s call for a tax hike, saying it would burden patients who use the drug to ease symptoms of cancer and other illnesses.

“These taxes are very, very high compared to other local business taxes,” said James Anthony, chairman of the Citizens Coalition for Patient Care, which raised $200,000 in a month for the referendum drive.

The City Council approved medical marijuana regulations in September that were to become effective last week. The rules would reduce the more than 100 pot collectives in San Jose to just 10 and require them to grow the drug on site — something the clubs say would invite federal drug raids and force them to close.

On Friday, the clubs submitted almost 49,000 signatures from city voters for a referendum to repeal the city regulations. That was substantially more than the nearly 30,000 needed — and enough to suspend the rules pending a formal tally and verification by the county registrar of voters.

Once the referendum petitions are certified, the council at its next regular meeting must either repeal the regulations or submit the referendum to voters at either the next regularly scheduled municipal election or a special election in at least 88 days. The ordinance would remain suspended until the vote.

The clubs had hoped the petitions would prompt the council to repeal the ordinance and work with them on rules more to their liking, rather than subject the city to additional costs as it copes with an 11th straight operating deficit.

“We don’t want to cost the city any money on an election,” Anthony said. “We’re willing to sit down with the mayor and council and work on legislation.”

He said San Jose already has the state’s highest tax on marijuana businesses and that a 10 percent levy would be double the rate in Oakland.

A referendum would be the second time in a little over a year that city voters have weighed in on medical marijuana. Last November, 78 percent of San Jose voters approved a “marijuana business tax” of up to 10 percent, a rate the council later set at 7 percent. The city has collected more than $2 million from the tax since it took effect in March, with as many as 94 of the more than 105 clubs making payments.

In that election, 51.8 percent of Santa Clara County voters rejected a failed statewide ballot measure that would have legalized recreational marijuana use.

Pot clubs have taken similar steps to fight regulations and bans in other California communities.

San Diego officials earlier this year repealed marijuana regulations following a successful referendum drive. But Butte County supervisors decided to allow a referendum vote next year.

The San Jose petitions also forced city officials to scramble to suspend pot club zoning that was supposed to go along with the regulations but was not subject to the referendum. City officials fear it will be more difficult to close unregulated pot clubs if they satisfy zoning requirements. The council was to vote on an urgency ordinance to suspend the pot club zoning Tuesday until the regulations take effect but postponed the decision a week.

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News Hawk- Jacob Ebel 420 MAGAZINE
Author: John Woolfolk
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Website: San Jose Mayor Chuck Reed calls for upping pot tax