Tax-averse GOP buzzing about new levy on pot

Marijuana is now so politically potent in Sacramento that it has inspired key Republicans to do something they don’t normally do: support new taxes.

George Runner, the Republican vice chair of the state’s Board of Equalization, is no supporter of legalizing marijuana for recreational purposes. In his time on the board, which administers the state’s tax system, and during his 12 years in the Legislature, he was no supporter of taxes, either. The Lancaster (Los Angeles County) resident maintained a spotless record as a taxloather from the Howard Jarvis Taxpayers As-

sociation, the powerful statewide conservative organization that Republicans turn to for fiscal guidance.

But after visiting Northern California’s “Emerald Triangle” — three counties that grow 60 percent of the nation’s cannabis — he became a realist when it comes the state’s estimated $3 billion marijuana industry.

With several measures before the Legislature designed to regulate the state’s virtually lawless medical marijuana market, Runner sent a letter to top Republican statehouse leaders last week urging them to “engage on this issue for the sake of good tax policy. I believe we can in good conscience support an excise tax on medical marijuana.”

The state already collects somewhere between $59 million and $109 million annually in sales taxes from medicinal cannabis. Adding an excise tax, a proposal included in some pending legislation, differs from the sales tax in that it is “imposed on a specific good, typically at the wholesale or distributor level,” Runner said. He likened it to how the Board of Equalization already collects excise taxes on alcohol, cigarettes and tobacco products.

He would like to see proceeds from the excise tax directed not toward the state’s general fund, but to local governments forced to spend tax dollars to cope with increased crime and environmental damage connected to the pot industry. And he doesn’t want it to be too high, so that businesses will comply and not go underground.

Justifying this to his conservative base — which generally shows zero support for tax increases — requires some nuance. Runner frames the policy as a way to force weed users, not “ordinary California taxpayers,” to foot the bill.

“As a matter of taxpayer equity, the medical marijuana industry and its end users — rather than ordinary California taxpayers — should pay the costs of combatting marijuanarelated crimes and other externalities,” Runner said in a two-page letter this month to GOP leaders and others.

Runner needs Republican support. An excise tax requires two-thirds support in the Legislature, meaning that while Democrats hold strong majorities in the Legislature, they can’t pass one on their own.

So far, Runner’s fellow Republicans have been been wary. “They’re fearful. They’re nervous,” Runner said. “But they get it, I think.

“It’s easy to have a Republican knee-jerk reaction of ‘no new taxes,’ ” Runner said. “But when there’s reasonableness involved, it’s important to get involved.”

Concerned Republicans looking to the Howard Jarvis Taxpayers Association for direction might be surprised: It hasn’t taken a position on a weed excise tax.

“And we may not,” group President Jon Coupal said Wednesday. “We understand that there is a problem out there now. We were aware that there are growers in Humboldt — who generally are libertarian and want to pay their taxes — that are different from growers in other places that are run by cartels.”

Coupal said he “doubts we’d go after” Republican legislators who would support an excise tax. “We could see how this is extending a tax that already applies to alcohol. We’d want to make sure that it is reasonable, though.”

And Runner’s antitax reputation is safe, too, Coupal said. “What he’s trying to do is get ahead of this issue. The people who want to ban all marijuana use, I’m sorry but that train has left the station.”

Another defense for lawmakers wary of backing a new tax: They would be taxing an industry eager to pay.

Many in the cannabis industry crave legal legitimacy that would allow them to do their business in the open. Due to federal laws that classify marijuana as an illegal drug on par with heroin, growers and dispensary owners struggle to open bank accounts, take out loans and conduct other common business transactions.

A marijuana-specific tax would help prove, at least on the state level, that pot is a mainstream industry.

“I think it’s fantastic,” said pot farmer Luke Bruner, founder of California Cannabis Voice Humboldt and the business manager of Wonderland Nursery in Humboldt. “As long as it’s fair.”

Still, some Republicans remain reluctant to accept tax dollars — even from an industry that wants to be taxed.

“It’s hard to get behind putting government hands deeper into Californians’ pockets until basic government functions like public safety and road repairs are addressed in the budget,” Amanda Fulkerson, a spokeswoman for the Assembly Republican Caucus. “As for pot specifically, we’d need to see formal bill language before we could say if we’d support it.”