SAN JOSE (CBS SF) – Three San Jose City Council members plan to propose an ordinance on Wednesday that would give the city the power to shut down medical marijuana dispensaries that skip out on their taxes.

Last year, according to the city’s finance department, about half of San Jose’s 158 medical marijuana dispensaries partially or completely neglected to pay a medical marijuana tax passed by voters in 2010.

The 2010 ballot initiative, Measure U, allows the city to tax marijuana businesses up to 10 percent of gross receipts.

Councilman Sam Liccardo said the amount that is not being paid is “significant.”

“I think a reasonable estimate would be seven figures, but whether that’s $1 million or $3 million, no one really knows,” he said.

Council members Liccardo, Rose Herrera, and Pierluigi Oliverio all signed a memorandum that proposes two ways of getting the marijuana dispensaries to pay.

“We needed something with more teeth. I think it was a surprise to everybody that dispensaries could avoid paying taxes without being shut down,” Liccardo said.

The memorandum proposes either amending the current law to give the city the ability to shut down dispensaries that don’t pay or enacting a broader ordinance that would allow the city to close any business at all that doesn’t pay its taxes.

The proposal will be discussed at Wednesday’s meeting of the Rules and Open Government Committee.

(Copyright 2012 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)


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