Pot Tax Nets City $290K

In its first month of collecting taxes on medical marijuana being sold inside city limits, San Jose took in almost $290,000. And it appears more money is still on the table.

The approval of Measure U by voters in last November’s election led to a 7 percent tax on all gross receipts for the city’s collectives. Less than three-quarters (73) of San Jose’s 100-plus collectives paid the business tax in March, according to city figures. Four collectives have already made payments totaling $20,000 for April.

With the City Council’s decision last month to cap medical marijuana collectives to 10, which could go into effect by September, it’s unclear how much money will be collected in future months as well as what costs will go into regulation. Measure U was billed by Mayor Chuck Reed and several councilmembers as a way to help the city increase revenue in the face of the city’s 10th straight year of a budget deficit.

Dave Hodges, who started the city’s first collective, San Jose Cannabis Buyers Collective, has said he is refusing to pay the tax on his new collective: All American Cannabis Club. Hodges claims the wording of Measure U would force him to break the law.

A failure to pay the tax results in a 25 percent increase of the amount due, plus interest on the unpaid tax.

On Friday, Reed called for the city to declare a fiscal and public safety emergency. City Manager Debra Figone’s office has said the city will be $115 million in the red for the upcoming fiscal year, which begins in July.

Click Here to Read the Medical Marijuana Tax Revenue Memo.

The following are key dates regarding regulation of San Jose’s medical marijuana collectives:

May 20 thru 27: Manager’s Budget Addendum (MBA) Released
June 8: Planning Commission hearing on Title 20, Land Use/Zoning Regulations
June 14: First reading of Title 20— Land Use/Zoning; Second reading Title 6—Regulations; City Council Consideration of MBA
June 21: Second Reading, Title 20
July TBD: Applications Made Available for Medical Marijuana Registration With Further Instructions on Process
July 14: Title 6 Effective Date
July 21: Title 20 Effective Date
July – August: Application Process Implemented
September GOAL: Select 10 Collectives and Process Registration with the City

Josh Koehn is a former managing editor for San Jose Inside and Metro Silicon Valley.


  1. This is how smart our City Council is, here they have a great source of revenue and what are they going to do?  Essentially shut it down.  I know that this tax revenue is not going to solve the city’s budget woes, but, every little bit helps.  Hmmm, real smart move.

  2. Just wait.  In three years the cost of enforcement personnel and their pensions and other benefits will exceed the revenue collected.  Another bureaucracy soon to be born, never to die.

    Oh, hey, Chuck, where do I apply to become one of the enforcers?

  3. The Dr. Martin Luther King Jr., Association of Santa Clara Valley and Co-Sponsor San Jose Council Member Kansen Chu would like to invite you to our next community meeting. The topic will be:

    Ombuds, Child Welfare, Abuse, and Safety Meeting

    Presenters will be:

    The County Of Santa Clara’s Ombuds person Brohne Lawhorne and Lori Medina of the Department of Family and Children’s Services

    Thursday, May 19, 2011
    San Jose City Hall in the Council Chambers
    200 East Santa Clara Street, San Jose, Ca. 95113
    6:00 p.m. to 8:00 p.m.

    If you are concerned about issues regarding child welfare, have questions or complaints about the Department of Family and Children’s Services, or simply need to know your rights, please attend this meeting.

    For more information please contact Kathleen Flynn at [email protected], or call 408-861-5323.

  4. > The approval of Measure U by voters in last November’s election led to a 7 percent tax on all gross receipts for the city’s collectives.


    The “medical” part of “medical marijuana” is pure sham: “Good for what ails ya’”

    Just old time snake oil patent medicine.

    Seven percent tax is an inconsequential pin prick just for show.

    The tax on “medical marijuana” should be 700 percent or 7000 percent.

  5. With the success of(medical) marijuana tax shekels gleefully in the fists of the silly-council, can medical meth be far behind?
    Can you smell what the rocks cooken?

  6. There are other tax collection minor adjustments that would far overshadow this Mickey Mouse net zero boondoggle. But those who have the critical thinking capabilities at City Hall are suppressed by a structure that rewards the Party Loyalists. Hint, listen completely to the last “Straight Talk” video. I anonymously put on the table for the first time. The City Manager rep’s reply exposed that they had no clue.

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