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Pot Politics

Los Angeles Votes to Scale Back Its Marijuana Merchants

A budtender pours marijuana from a jar at Perennial Holistic Wellness Center medical marijuana dispensary on July 25, 2012 in Los Angeles

Photograph by David McNew/Getty Images

A budtender pours marijuana from a jar at Perennial Holistic Wellness Center medical marijuana dispensary on July 25, 2012 in Los Angeles

Angelenos may like their pot, but yesterday’s election showed they have their limits. A large majority voted to regulate and tax medical marijuana dispensaries across the country’s second-largest city.

In 1996, California was the first state to legalize medical marijuana, and Los Angeles has long struggled with how to regulate the pot dispensaries that eventually sprouted up all over the city. Although the businesses were slow to start, 186 dispensaries were in operation by 2007, when the L.A. City Council, in an attempt to reign in the growth, issued a moratorium on new stores. A loophole in the law failed to stop the dispensary explosion, and by 2009 as many as 600 stores criss-crossed the city in neighborhoods both rich and poor. That number now tops 1,000, according to L.A. Weekly, forming a part of what my colleague Sheelah Kolhatkar described as the “aboveground-underground market” for marijuana in the state.

The city council banned all marijuana dispensaries last year, only to repeal the ban amid opposition. With the issue still unresolved, the question of oversight was put before voters on Tuesday’s ballot with three options: raise taxes on the stores without limiting their growth; restrict the number of stores while leaving taxes alone; or limit stores and also increase taxes.

Almost 63 percent of voters supported the limit-and-tax option, known as Proposition D, which caps dispensaries at the 135 stores that registered before the 2007 moratorium and which raises business taxes on their operations to $60 per $1,000 in gross receipts, up from $50. The winning measure also bans dispensaries within 1,000 feet of schools and within 600 feet of a park or another pot dispensary.

(In a separate result from Tuesday’s election, 54 percent of the voters supported Council Member Eric Garcetti to be the city’s next mayor, ending a fierce campaign that forced the electorate to choose between two similar candidates.)

Los Angeles has struggled for years to get a grip on how to regulate and tax pot, offering a cautionary tale for the growing number of cities and states that are reckoning with similar questions, be it over recreational or medical use. Proposition D will pose a challenge to see, nearly two decades later, if a city at the forefront of legalized marijuana can implement its own rules better and force hundreds of existing dispensaries actually to close their doors.


Weise is a reporter for Bloomberg Businessweek in Seattle. Follow her on Twitter @kyweise.

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