Proposition CB: What to know about LA city ballot measure

Under Proposition CB, registered voters in the city of Los Angeles are asked whether to tax unlicensed cannabis businesses during the June primary election.

What is Proposition CB?

Since the legalization of recreational cannabis in 2017, shops have to pay business taxes to legally operate within city limits. But many unlicensed dispensaries have enjoyed having an advantage among consumers because their cannabis products are cheaper from not having to pay the taxes.

To eliminate the commercial advantage for unlicensed shops, Proposition CB seeks to apply the city’s existing cannabis business taxes to unlicensed stores at current rates: 10% on cannabis sales, 5% on medical cannabis sales, 2% on cultivation and 1% on testing and transportation.

A simple majority of votes is needed to pass, and the measure does not have an expiration date. To end Prop CB, voters must decide.

Why proponents want to tax unlicensed dispensaries

Supporters of Prop CB say the proposal could achieve at least two goals: generating more city revenue while holding unlicensed operators accountable.

If Prop CB passes, it would generate approximately $30 to 35 million annually, city officials estimate. The fund would be used for important services such as street and sidewalk repairs, 911 emergency response and fire protection.

Why opponents do not want Prop CB

One of the biggest arguments against the proposal is that it could normalize or legitimize illegal cannabis businesses, allowing unlicensed shops to continue to operate without shutting them down.

It is also not clear how the city would enforce Prop CB to track down unlicensed cannabis dispensaries and make sure they pay the taxes.