Feb 022012
 February 2, 2012

cannabis cash cropMedical Marijuana Dispensaries Are One Of The Most Profitable Enterprises In San Francisco

The San Francisco controller’s office has done an unprecedented analysis of the amount of sales tax revenue going to the general fund from the sale of medical cannabis at permitted city dispensaries. The results are staggering.

San Francisco has an 8.5 percent sales tax rate, coming from a combination of the state’s 7.25 percent sales tax with a local one percent sales tax that goes to SF’s general fund, and a .25 percent sales tax that goes into other buckets (like transportation). San Francisco’s roughly two dozen permitted clubs must pay the 8.5 percent sales tax, which is then reported to the controller’s office.

For the most recent reporting period which ended with the third quarter of 2011, a year’s worth of general fund revenue from the sales tax on medical marijuana totals “just over $410,000,” said Curt Fuchs, senior economist in the Controller’s office.

Since that figure is one percent of sales, that means San Francisco dispensaries sold about $41 million worth of marijuana in a year, which equals a $50 (or about an eighth of an ounce) dispensary purchase for every person in the city.

Of course, non-residents purchase medical cannabis in San Francisco too. But in the absence of valid epidemiological data on marijuana consumption, it’s a very powerful signal.

All other things being equal to SF, and adjusted for population, Los Angeles dispensaries might sell an estimated $475 million worth of dispensary cannabis per year, and California clubs might be selling an estimated $1.9 billion in medical cannabis per year.

Fuchs clarified that sales taxes were paid by 26 dispensaries, and two of them reported no sales. The total sales taxes for all retail outlets in San Francisco was $125 million, so dispensaries account for about one third of one percent of the city’s sales taxes, Fuchs said.

Sales tax revenue from medical marijuana has been rising. A year’s worth of receipts ending in the first quarter of 2011 totaled $350,000, he said, while a year’s worth of receipts for the period ending with the second quarter of 2011 totaled $381,000.

U.S. Attorneys attacked San Francisco’s permittees beginning in October of 2011, and have since caused the shutdown of five dispensaries, as well as helped to suspend new dispensary permitting in the City. Future revenue estimates may have to be revised down.

But the numbers are telling: if legal cannabis is a $1.9 billion industry in California, and the black market is at least as big, as many say – that’s a $4 billion a year California industry. Or in other words, it could employ about 66,000 people at a $60,000-per-year salary. And that’s just one state.

By contrast, the entire D.E.A. budget is $2.4 billion, employing about 9,236 people.

So, how do we win a war on drugs, besides going bankrupt locking up a fifth of the population? Aren’t we already deeply in debt, and don’t we already have the highest incarceration rate in the world?

By David Downs for East Bay Express, sent to me by Americans For Safe Access San Francisco

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About Johnny Green

Johnny Green is a marijuana activist from Oregon. He has a Bachelor's Degree in Public Policy. Follow Johnny Green on Facebook and Twitter. Also, feel free to email any concerns.