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LA City Council Votes To Stop Issuing Business Tax Certificates To Medical Marijuana Dispensaries

LOS ANGELES ( — The Los Angeles City Council Tuesday voted in favor to stop issuing new business tax certificates to medical marijuana dispensaries.

According to city leaders, maintaining a tax certificate does not indicate that the business is legal, but rather implies that the company has applied to pay taxes to the city.

Council members voted 12-0 in favor of the motion, which calls for no new certificates to be issued for "any medical marijuana collective business activity."

Under the ordinance, a misdemeanor charge would be filed against any business owner who lies on an affidavit stating their dispensary complies with Proposition D -- a motion that went into effect in 2013 and banned most medical marijuana dispensaries from operating in Los Angeles.

Any medical marijuana business that displays or maintains a tax certificate that is "expired, suspended or otherwise invalid" will also be considered a misdemeanor violation.

The ordinance would require dispensary owners to fill out the affidavits as a part of the registration renewal process during the annual payment of taxes.

Since Proposition D went into effect, city finance officials have continued to issue tax certificates and collect taxes from dispensaries, despite what the shop's legal status may be.

During this time, authorities have even accused several businesses of using the certificates to trick their landlords into thinking that they are a permitted dispensary.

In 2014, city officials collected $5 million tax registration certificate holders who identified themselves as marijuana businesses. Towards the end of 2015, the city collected $4.4 million from 447 dispensaries while about 100 medical marijuana businesses were believed to have been in compliance with Proposition D.

Authorities claim they are unequipped to determine whether a medical marijuana dispensary is in compliance with the law.

According to city leaders, however, collecting taxes while also banning medical marijuana businesses from operating sends a mixed message to the public.

In an effort to curb the problem, city officials are working to change the color of the tax certificates along with altering language to make it clearer for certificates to read that they are only for "tax compliance purposes."

Efforts are also underway to stop giving dispensaries the ability to register for the certificates or to file taxes online, city leaders said.

This new ordinance "finally puts an end to the issuance of business tax licenses to illegal pot shops in the city of L.A.," added Councilman Joe Buscaino.

At this time, only some dispensaries are allowed to operate due to exceptions under Proposition D. These businesses are required to pay business taxes to the city.

In order for the motion to go into effect, Mayor Eric Garcetti must grant his approval.

(©2016 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services contributed to this report.)

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