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Oakland, California is short on cash, and it's thinking it might find a pot of gold in pot. The city is about to decide whether to impose a huge new increase on the tax it imposes on shops that sell medical marijuana. What's surprising is that the people who sell medical marijuana say higher taxes may actually help their business. NPR's Richard Gonzales reports.
RICHARD GONZALES: In a downtown Oakland coffee shop, rock music welcomes a steady flow of customers seeking a quick jolt of java. Anyone with a doctor's note can buy something more relaxing. How about an eighth ounce of high-grade medical marijuana? That's 40 bucks for the cannabis, and $4 in sales tax.
For Richard Lee, the owner of this pot club, the sales tax is just the price of doing business.
Mr. RICHARD LEE (Owner, Medical Marijuana Dispensary): My business pays $300,000 a year in sales tax, plus another half-million in payroll taxes, income taxes. So we estimate that all four dispensaries in Oakland pay over a million dollars a year in sales tax already.
GONZALES: And now the city of Oakland wants a bigger cut of Lee's action. Right now, medical marijuana dispensaries pay a city tax of $1.20 for every $1,000 they take in. In July, voters will decide whether the dispensaries should pay even more - as much as $18 for every $1,000 in gross receipts.
Lee and other dispensary owners not only support the proposed new taxes, they're also the ones who brought the idea to city officials in the first place.
Mr. LEE: We're basically just trying to say that we're like other businesses, you know. We're here to pay taxes, create jobs and improve the community.
GONZALES: Councilwoman Rebecca Kaplan says the new tax could generate upwards of a million dollars annually and would make Oakland the first city in the country to directly tax medical marijuana.
Councilwoman REBECCA KAPLAN (Oakland, California): You know, obviously, in these economic times, we're trying to find revenue everywhere we can. And so to have someone stepping up and saying, you know, we're willing to pay more, it's a pretty beautiful thing.
GONZALES: It's not the first time officials have looked to marijuana to fill their tax coffers. A bill to legalize and tax cannabis statewide has already been introduced in the California legislature. And state finance officials estimate that legalized pot could bring in about $1.5 billion in new taxes to the cash-strapped state.
But opponents of medical marijuana aren't convinced. Calvina Fay is the executive director of the Drug Free America Foundation. She says medical marijuana may be legal in California and 12 other states, but its sale is still a federal crime.
Ms. CALVINA FAY (Executive Director, Drug Free America Foundation): I think it is one more step in creating the illusion that they're operating within the law, that what they're doing is okay.
GONZALES: Other critics of the tax proposal say the medical marijuana industry is looking for more than legitimacy. Ron Brooks, the president of the National Narcotic Officers' Associations' Coalition, says the ultimate goal is the legalization of cannabis.
Mr. RON BROOKS (President, National Narcotic Officers' Associations' Coalition): Their strategy has long been that they just can't go to the voters right now in today's environment and say, legalize marijuana. But they know that there is a growing movement that supports marijuana and, unfortunately, when you start to chip away at our national drug policy, you know, you begin to have people believe that somehow this is safe.
GONZALES: Brooks won't get much argument from dispensary owner Richard Lee. He says the Oakland tax proposal is written so broadly that it would cover anyone involved with growing and selling marijuana should it ever become legal.
Mr. LEE: We see it as part of the overall picture of legalization, of changing the attitudes toward cannabis, you know, that instead of seeing it as an underground thing that people do to get out of paying taxes, you know, we're trying to make it a regular part of the business of the city.
GONZALES: A recent Field poll shows for the first time, 56 percent of those surveyed in California support legalization of marijuana, and Governor Arnold Schwarzenegger says he's ready for an open debate on the idea.
Richard Gonzales, NPR News, Oakland.