Marijuana Tax Tipped to Combat LA Homeless Issues

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The Los Angeles City Council has declared a state of emergency on homelessness as the number of people living on the streets continues to increase with the latest count by the Los Angeles Housing Services reaching around 47,000. Many of these people have mental illness or substance abuse issues and some have fallen prey to devastating circumstances such as expensive or debilitating medical conditions, job loss or eviction. Now the streets of Los Angeles continue to fill up with homeless encampments, filled with thousands of people in need of help. County officials, working to solve the issue may have just found a solution in the way they use a potential marijuana tax.

How the Marijuana Tax Would Help

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Los Angeles has one of the worst homeless epidemics in the U.S.

A ballot measure, was approved this week by the Board of Supervisors that, if voted in, would place a 10% marijuana tax on all cannabis-related businesses. This would include retailers, cultivators and processors. The tax is estimated to bring in approximately $130 million a year, which would go towards paying for mental health care, substance abuse treatment, rental subsidies, emergency housing and other services that would go towards preventing homelessness on the streets of LA. This is not considered to be the sole solution. The board also agreed to put a $1.2 billion bond initiative on the November ballot that would allow the city to build housing for the homeless. The money would only be allowed to be used for building homes though, which is why there is importance being placed on generating the funding to pay for services that would keep people off the streets.

The Importance of Recreational Legalization

A big part of this plan is dependent on whether or not California votes to legalize the adult use of marijuana for recreational purposes. This measure will also appear on the ballot this November. If the state votes to legalize adult use, the amount of marijuana tax that will be generated will be vastly higher. If legalization goes through, the city would not be allowed to collect tax money until 2018. County analysts project that only $13 million would come from the medical marijuana industry so this is something to consider. California, Nevada and 6 other states are voting this November on whether to legalize recreational marijuana and if the marijuana business tax is approved, it could set a trend for other places in need of funding.

Alternative Ideas Considered

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Other methods of fighting homelessness have been proposed but marijuana taxes are getting the most attention.

The Board explored various options, prior to approving the marijuana tax for the ballot. A “millionaire tax” was first proposed on high income earners, but the county doesn’t have the authority to raise income tax so this was abandoned. A property tax was also proposed by supervisor Mark Ridley, as well as a quarter-cent sales tax but these ideas were not approved by the board, even though both proposals individually would have generated a significantly higher tax revenue. The quarter-cent sales tax would generate approximately $355 million a year. In the end, the board supported the marijuana tax.

We will have to see which plan ultimately works but it is good that a priority is being placed on this catastrophic issue. For now, a lot is dependent on whether or not California votes to legalize recreational marijuana this November.

 

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