Marijuana growers may be taxed as budget goes to pot

Governments around the world have tried to clamp down on marijuana but one Californian city has taken a different approach: If you can't beat 'em, tax 'em.

After becoming the first US city to impose a special tax on medical marijuana dispensaries, Oakland could soon become the first to sanction and tax commercial cannabis-growing operations.

Selling and growing marijuana remains illegal under US federal law, but two Oakland council members are preparing legislation, expected to be introduced next month, that would allow at least three industrial-scale growing operations.

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One of the authors, councillor Larry Reid, said the proposal is more of an effort to bring in money than an endorsement of legalising marijuana use – although the council has unanimously supported that, too.

The city is facing a $42m budget shortfall. The tax that voters approved last summer on the four medical marijuana clubs allowed under Oakland law is expected to contribute $1m to its coffers in the first year.

A tax on growers' sales to the clubs could bring in substantially more, he said.

Mr Reid said: "Looking at the economic analysis, we will generate a considerable amount of additional revenues, and that will certainly help us weather the hard economic times that all urban areas are having to deal with."

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A report prepared for AgraMed, one of the companies planning to seek a licence, said its proposed 100,000 sq ft project near the Oakland Coliseum would produce more than $2m in city taxes each year.

The marijuana nurseries now under consideration would have more in common with large factories than clandestine cannabis farms.

Dhar Mann, founder of an Oakland hydroponics equipment store called iGrow, and Derek Peterson, a former stockbroker, have hired an architect to draft plans for two warehouses where marijuana would be grown and processed.

There is a statewide campaign to make California the first state to legalise the recreational use of marijuana and to tax it.