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San Diego Starts Cashing In On Legalized Cannabis

A customer purchases marijuana at Harborside marijuana dispensary, Monday, Ja...

Photo by Mathew Sumner / Associated Press

Above: A customer purchases marijuana at Harborside marijuana dispensary, Monday, Jan. 1, 2018, in Oakland, Calif. Starting New Year's Day, recreational marijuana can be sold legally in California.

San Diego's cannabis business tax brought in $358,348 in the first month of legalized recreational marijuana sales, according to early figures released to KPBS on Monday.

Local marijuana businesses are required to pay the 5 percent gross receipts tax every month, and the first due date to pay the tax was Feb. 28. A city spokeswoman said the figure was for retail transactions in the month of January.

San Diego voters passed the cannabis business tax, titled Measure N, in November 2016 just as California voters approved Proposition 64 to legalize recreational marijuana. The local tax also applies to recreational cannabis cultivation, manufacturing and distribution, but not to any medical marijuana activity.

It was not immediately clear if the city had received any money from the handful of marijuana cultivation and manufacturing businesses in San Diego that have been granted temporary state licenses, or if any unlicensed cannabis businesses had come forward to pay the tax.

The January revenues are relatively close to what city finance officials had forecast for the tax. They expect the revenue to grow to $5.5 million in the next fiscal year, which begins July 1.

RELATED: Marijuana Businesses Are Legal — But Darn Near Impossible To Open In San Diego

City Councilwoman Barbara Bry, who chairs the council's budget committee, said the tax dollars should go toward public safety.

"We have just granted pay raises to our police force, well-deserved pay raises, so that's where the money should go first," she said.

The state is also collecting a 15 percent excise tax on all retail marijuana sales, and cultivation taxes of $9.25 per ounce of flower and $2.75 per ounce of leaves. Medical marijuana patients with ID cards from their county health department are exempt from paying sales tax.

San Diego may be in a good position to compete for public health and safety grants funded by the state taxes. Only cities and counties that have decided to permit adult use cannabis sales and cultivation are eligible for those dollars, which the State Controller's Office is expected to start distributing later this year. San Diego is currently the only city in the county that permits recreational marijuana commercial activity.

"I'm hopeful that the city will get its fair share of whatever state money is available," Bry said. "We've really had a good faith effort in San Diego to pass reasonable and responsible regulations of the complete cannabis supply chain."

UC San Diego's Center for Medicinal Cannabis Research is guaranteed $2 million from marijuana taxes each year under Proposition 64. Most of the state tax dollars are earmarked for youth programs, including substance use disorder education, treatment and prevention.

The first month of legal recreational marijuana sales in San Diego brought in just under $360,000 from a voter-approved cannabis business tax. The money could help fund raises for San Diego police officers.

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