SAN JOSE (KCBS) – The San Jose City Council has unanimously passed an ordinance increasing taxes on medical marijuana dispensaries in the city.

The tax rate will be going from 7-to-10 percent starting in July, a move that is expected to generate $1.5 million in additional revenue each year.

“We probably have 100 dispensaries operating in San Jose, even though they’re illegal under federal law and not permitted under San Jose’s zoning ordinance,” said San Jose Mayor Chuck Reed. “They’re allowed by state law and so we’re trying to accommodate people who have medical needs, not necessarily those who have recreational interests. We will continue to try to do that, even though the law is a little bit uncertain. But there’s no reason they shouldn’t pay taxes on their operations just like other businesses.”

Earlier this month, the California Supreme Court ruled that cities have the right to either ban or regulate pot businesses.

That ruling rejected arguments that it would violate patients’ rights under Proposition 215, or the Compassionate Use Act of 1996, which was the start of medical marijuana use in the state.

(Copyright 2013 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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