Early returns showed Los Angeles voters backing a proposal to impose taxes on unlicensed cannabis businesses operating in the city, while remaining divided on measures aimed at updating the city’s so-called hotel tax.
An initial tally of ballots counted by the Los Angeles County Registrar-Recorder/County Clerk showed Measure CB leading with 239,838 votes, or 70.82%, compared to 98,844 votes, or 29.18%, against the measure.
Measure CB would extend existing cannabis business taxes to unlicensed cannabis operations, including a 10% tax on cannabis sales, a 5% tax on medical cannabis sales, a 2% tax on manufacturing, cultivation and other commercial activities, and a 1% tax on transportation, testing and research.
City analysts estimated the measure could generate between $30 million and $35 million annually for the city’s general fund, which supports fire and police services, street and sidewalk repairs, transportation projects and other municipal services.
Administrative and enforcement costs associated with the measure were projected at between $2.2 million and $10.5 million, according to the ballot language.
Recreational cannabis was legalized in 2016 by California voters under Proposition 64. In 2017, L.A. voters approved Proposition M, authorizing the city to regulate and tax local cannabis businesses.
Meanwhile, early returns showed mixed results for Propositions TC and TT, two measures aimed at updating the city’s transient occupancy tax, commonly known as the hotel tax.
Los Angeles voters were asked to decide Propositions TC and TT, which would apply the city’s hotel tax to online travel and booking companies and temporarily increase the tax rate from 14% to 16% through 2028 before reducing it to 15% in subsequent years, respectively.
Proposition TC was leading with 188,983 votes, or 55.42%, while 152,048 votes, or 44.58%, were cast against the measure.
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 was trailing with 189,340 votes, or 56.08%, against the measure, compared to 148,255 votes, or 43.92%, in support.
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.