LOS ANGELES (CNS) – Los Angeles voters will be asked Tuesday whether to approve a tax on unlicensed cannabis businesses, and update the city’s fees on hotels.
City voters will weigh in on three ballot measures, two of which are associated with the city’s transient occupancy tax, also known as the hotel tax.
Proposition CB asks whether there should be an ordinance to apply existing cannabis business taxes to unlicensed cannabis businesses, which would include the following rates: a 10% tax on cannabis sales, a 5% tax on medical cannabis sales, a 2% tax on manufacturing, cultivation or other commercialization, and a 1% tax on the transportation, texting and research.
City analysts have estimated the tax could generate about $30 million to $35 million for the city’s general fund, which serves to support the fire and police departments, street and sidewalk repairs, transportation projects, and other services.
Administrative and enforcement efforts associated with the proposed ordinance would cost between $2.2 million and $10.5 million, according to the proposition language.
Recreational cannabis was legalized in 2016 by California voters under Proposition 64. In 2017, LA voters approved Proposition M, authorizing the city to regulate and tax local cannabis businesses.
Meanwhile, Propositions TC and TT on Tuesday’s ballot ask voters whether the hotel tax should be applied to online travel and booking companies, and to temporarily increase the tax from 14% to 16% through 2028, and then decrease it to 15% in the following years.
City officials say Proposition TC modernizes the hotel tax, which is applied to all fees and charges associated with occupancy of hotel and motel rooms, short-term rentals and hostels. The proposition aims to require online travel companies and platforms to collect and remit the tax on the full amount paid by customers, which officials say will ensure fair and consistent tax collection across the lodging industry.
Proposition TC would generate an estimated $5 million annually for L.A., analysts said.
Proposition TT seeks to increase the hotel tax through 2028, when major events are scheduled to happen, starting with the World Cup this month, the Super Bowl in 2027 and the 2028 Olympic and Paralympic Games.
City officials estimate Proposition TT would generate $44 million through 2028, and decrease down to $22 million annually once the rate falls by 1% in 2029.
Malibu, Santa Monica and Beverly Hills all have a 15% hotel tax.
City officials have said the proposed tax measures are not intended to impact city residents, but rather tourists and other outside visitors
City Council members Tim McOsker, Bob Blumenfield, Eunisses Hernandez, City Administrative Officer Matt Szabo, and Chief City Tourism Officer Doane Liu are encouraging voters to approve Propositions TC and TT.
They argue the proposed taxes are anticipated to even the playing field for licensed cannabis businesses and ensure the hotel tax is collected from online platforms — two issues the city has struggled with.
Opponents of Proposition TT such as City Councilman John Lee, Hotel Association of Los Angeles President Jackie Filla, and LAX Coastal Chamber President Chad Madender have argued that increasing taxes doesn’t help Los Angeles prepare for major global events.
“Higher visitor costs make Los Angeles less attractive to travelers and conventions, especially when the city competes with numerous affordable destinations,” according to the official argument against the proposition.
The propositions will become effective if approved by a majority of voters.
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