Subscribe to Entrepreneur for $5

Los Angeles Referendum Set for New Marijuana Regulations

LA voters consider how to transition from prohibition and mass incarceration to shared prosperity and respect for adult personal choice.

Opinions expressed by Entrepreneur contributors are their own.

With California voters having legalized recreational marijuana last November, and medical marijuana having been legal for many years, Los Angeles (like Denver with the encouragement of Colorado voters) is pioneering how the rest of the country could beneficially regulate and tax cannabis.

Christopher Badzioch | Getty Images

City leaders in Los Angeles are asking voters to approve Proposition M, a wide ranging measure that would establish a new licensing structure, lower the tax on medical marijuana, levy a tax on newly legal recreational marijuana and encourage opportunities for minorities in the growing marijuana industry. Proposition M has the support of the marijuana industry, elected city officials and traditional media outlets such as the Los Angeles Times.

Cities around the country confronting how to license, tax and regulate cannabis are watching what happens in Los Angeles. Voters will decide the measure March 7.

Related: How Do We Measure the Statistical Significance of Legal Cannabis?

Replaces existing law

In 2013, when only medical marijuana was legal in California, Los Angeles voters approved Proposition D limiting the number of medical cannabis dispensaries to 135 and imposing a 6 percent tax on medical marijuana sales. Proposition M would repeal much of the 2013 measure while expanding regulations to govern the recreational marijuana industry. If approved, Proposition M will:

  • Reduce the tax on medical marijuana from 6 percent to 5 percent
  • Set a 10 percent tax on recreational marijuana sales
  • Set a 1 percent to 2 percent tax on businesses involved with the cultivation, transportation, testing and research of marijuana
  • Mandate minority-owned businesses be included among licensed marijuana dispensaries
  • Impose tough penalties for growing and distributing marijuana outside the regulated, legal process – even granting utilities the right to cut service to illegal marijuana shops

The new proposition gives the city council latiatude to make changes without requiring voter approval.

A Model?

Much like Denver before it, Los Angeles is a test case studied by civic leaders who must devise workable regulations for the cannabis industry poised to grow rapidly in the eight states that have legalized recreational adult use. Given its size and the fact both medical and recreational marijuana are now legal, many believe Los Angeles will become the cannabis capital of the United States, if not the world. Even High Times magazine is relocating there.

In an editorial supporting Proposition M, the Los Angeles Times editorial board noted an opposing measure, Proposition N, was written by the cannabis industry. However, backers of that proposal have now backed Proposition M – although that support came too late to remove Proposition N from the ballot.

The Times board wrote that Proposition M “best serves” customers, communities and businesses either involved in or affected by the legal marijuana industry.

Related: Marijuana Industry to Create 283,000 Jobs by 2020, Report Projects

Follow on Instagram to stay up to date on the latest cannabis news.