Your Tax Dollars At Work: Harborside

Let’s examine what the closing of Harborside Health Center might mean.  After all, it’s our tax dollars at work.
“Co-founded in 2006 by Executive Director Steve DeAngelo, Harborside has in many ways set standards for the medical marijuana industry.  The sleek operation — which has a smaller sister dispensary in San Jose — lab tests its cannabis to assess quality and measure key chemical components; offers acupuncture, pain management and other free wellness services to its thousands of members; and employs more than 125 people. DeAngelo worked closely with Oakland officials as they crafted one of the nation’s strictest regulatory schemes to monitor and tax the industry, and officials say he complies with all local and state laws.

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Steve DeAngelo of Harborside Health Center

If the [federal government] drives Harborside out of business, a chunk of Harborside’s $30 million in annual sales would no doubt return to the streets, benefiting dealers who don’t lab test their products or work with patients to customize medications, DeAngelo and other advocates said Thursday. Aside from the effect on patients, Harborside’s closure — or failure to find another property if the current forfeiture action moves forward — would deal a direct financial blow to the Bay Area city.

Last year alone, Harborside paid $3.5 million in taxes — $1.1 million of which went to Oakland coffers as a business tax. Additional sales tax and payroll taxes were paid as well. The business tax represents the bulk of the $1.4 million paid last year by Oakland’s four permitted dispensaries combined, among them one associated with medical marijuana pioneer Richard Lee that was shuttered in April after a federal raid and is now regrouping without Lee’s participation.

Lee’s company, which operated the industry trade school known as Oaksterdam University, dissolved, forcing 45 direct employees off the payroll, cutting their health benefits and eliminating 63 other union jobs in related businesses, said Dale Sky Jones, who now operates the university and is rebuilding its curriculum. Out-of-towners had flocked to the university’s classes, staying at downtown hotels and further spurring the city economy, added Oakland revenue manager Dave McPherson.

McPherson said the business taxes paid by dispensaries make up about 2.5% of the $54 million paid citywide. But that is no small contribution in a city struggling with a shrinking police force and the return to the state of $21 million in redevelopment funds, said City Councilman Ignacio De La Fuente. “This action will have a long-term impact,” he said. “Landlords will be intimidated into not leasing buildings” to dispensaries.

Also coming to the defense of Harborside on Thursday were Rep. Barbara Lee (D-Oakland); State Board of Equalization member Betty Yee, who said her office collects $58 million to $105 million in annual state tax from California dispensaries; and Oakland City Atty. Barbara J. Parker, a former federal prosecutor. “I strongly oppose federal actions against members of Oakland’s business community who are complying with California and Oakland laws and regulations and paying their fair share of taxes,” Parker wrote in a statement.
Original source material, and there’s a lot more to this big story, is here.

HMJ has been following this story arc for a while now. Find more at HMJ on asset forfeiture, Oksterdam University.

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Author: DavidB

a heathen, but hopefully not an unenlightened one

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