Santa Cruz Voters Weigh Medical Marijuana Business Tax

Oct 30, 2014

Marijuana flowers and buds are displayed at the Kind People's Collective in Santa Cruz County. Voters decide on Tuesday whether to approve a new business tax of up to 10 percent for medical marijuana businesses in the city and county.
Credit KindPeoples Collective

Santa Cruz is known for being relatively friendly to taxes and to marijuana. On Tuesday, voters in the city and county of Santa Cruz weigh those two together as they consider a new tax on medical marijuana businesses.

The inside of the Kind Peoples Collective -- a nonprofit medical marijuana dispensary on Soquel Avenue in Santa Cruz County -- actually looks a lot like a coffee shop or juice bar. There’s music playing, T-shirts for sale and the products are displayed behind spotless glass.

Khalil Moutawakkil is the cofounder of the collective, which opened in February of this year. Since its opening, Kind People’s has signed up 7,000 members.

Now the cost of doing business may soon go up, if voters approve a new business tax for places like the Kind Peoples Collective. Two measures in Santa Cruz call for a 7 percent tax on revenue with the option to go up to 10 percent.

Moutawakkil supports the tax and says he won’t be passing it on to his customers.

“It’s the best step that we have right now for cooperating with our governments to move this industry forward into the light and to legitimize us as real businesses in our community that have a lot to offer,” he says.

Two things happened that led to this tax effort.

One, about a year ago, the California Supreme Court upheld the authority of municipalities to regulate or even ban medical marijuana operations. That gave cities and counties the power to decide what to do locally.

And two, Santa Cruz County decided it was time to do something about illegal, large-scale growers who County Supervisor Neal Coonerty says are decimating land in the Santa Cruz Mountains.

“You know, we’re in middle of a drought, and they’re taking from streams and wells, which they shouldn’t do,” Coonerty says. “They’re running generators all day long 24-7, which, the noise factor plus the pollution of the generators, is just terrible. They have propane tanks that they’re heating plants with, they grade hills, they just scrape away hills, and the runoff and environmental degradation is terrible.”

Coonerty says the county would use the tax money to help fight growers like these.

“We definitely see it as a way to make sure that the environment is not degraded, and things are safe for everybody,” Coonerty says.

Michael Boyd is an outspoken critic of the taxes.

He says it’s not his fault that growers are causing damage in the hills.

“That’s the property owner’s fault,” he says.

Boyd lives in Soquel and he uses medical marijuana daily to treat chronic pain.

He says many end-of-life patients rely on medical cannabis just to get through the day. And he is fighting the tax because he thinks inevitably the cost will get passed on to customers who need this medicine.

“There’s a lot of people worse off than me, that this is all they get,” he says. “It’s like they’re on their way out. They know they’re dying of cancer. And they know the drugs they’re getting aren’t going to make them feel better but they can get their medical marijuana.”

He feels the tax is too great a burden -- so much so that he is suing the county to try to stop it.

“It’s a hardship for everyone now,” Boyd says. “Why wouldn’t it be a hardship to add 10 percent?”

In Santa Cruz County, which has about a dozen dispensaries, the tax would generate an estimated $900,000 a year. In the City of Santa Cruz, which only has only two dispensaries, it is projected to bring in less than $100,000.

Both measures require a simple majority to pass.