Bankrupt California city eyes marijuana for revenue

July 11, 2014: Marijuana plants for sale are displayed at the medical marijuana farmers market at the California Heritage Market in Los Angeles, Calif. (Reuters)

The bankrupt California city of San Bernardino has a new idea for raising revenue – legalize medical marijuana, and tax the pot.

Ironically, the plan was spurred by concerns about not having enough resources to crack down on the illegal medical marijuana dealers springing up all over town.

So the city is now looking at legalizing the sellers, and using the proceeds to enforce the regulations.

It’s not quite “if you can’t beat ‘em, join ‘em,” but like many municipalities in California today, San Bernardino is recognizing that it could be bringing millions of dollars into its foundering coffers each year if it opened its doors to regulated medical marijuana dispensaries. And it would be able to have a say in who operates these places, as well as how and where.

“This is a no-brainer,” said Karen O’Keefe, director of state policies at the Marijuana Policy Project in California. “More and more people are realizing that you’d really have to be in the Stone Age to oppose this.”

But San Bernardino is not exactly there, yet. According to City Attorney Gary Saenz, a legislative review panel has been formed by the City Council to study the idea. This panel is collecting data, talking to the city police department and examining laws in other jurisdictions before bringing a proposal to the full committee. It plans on holding at least two more public meetings on the subject through August.

“We are in the exploratory phase,” Saenz told FoxNews.com, insisting that “my primary objective is to close down the seedy shops.”

Police have reported as many as 20 illegal storefronts in town at any given time, he said. Legalizing and regulating this now-unwieldy industry, he feels, is one of the tools available to the city to start taking control.

“We have in this city a proliferation – and a lot of cities in California are experiencing it – of illegal medical marijuana dispensaries. These people are defiant and they are opening up these things right and left.

“We are a city of limited resources,” he added, noting to shut a business down requires civil enforcement, including protracted legal proceedings, and often the police. Even when they do go after the violators aggressively, often they pop up elsewhere and another comes to town in its place.

“We can’t close them down to the satisfaction of our citizens,” said Saenz, so “this city attorney’s office is presenting our council with options. And the idea is essentially, primarily, to close down illegal shops” and using the new money from the legal ones to do it.

City Council member James Mulvihill said he was on board with the idea early on after hearing it cost the city $10,000 every time it went after an illegal dealer. He, as well as the mayor’s chief of staff, Michael McKinney, say any funds gleaned from the regulation and tax of marijuana dispensaries would be used exclusively for enforcement.

“I think we are making the right steps. It’s been a hot issue,” Mulvihill told FoxNews.com, noting that he has not received a lot of negative feedback since the idea was made public in the last two open council meetings. “Prohibiting them is obviously not working. It’s almost easier to regulate it than prohibit it.”

He said he is supporting a plan to permit less than a half a dozen dispensaries. He said they could charge upward of $60,000 a year in fees, plus something in the order of 10 percent a year in taxes, much like nearby Palm Springs, which he says regulates in order to pay for enforcement too.

McKinney said Mayor R. Carey Davis, prefers “not to see any marijuana dispensaries in the city of San Bernardino,” but is listening to all the options on how to combat the current problems.

McKinney said his office has been getting calls advocating both sides of the issue.

Saenz wants to be clear this idea has not sprung out of a newfound desire of town officials or citizenry to embrace marijuana. In fact, San Bernardino is one of 200 California municipalities that have maintained an outright ban on pot shops since medical marijuana was made legal through a ballot referendum in 1996.

This was reaffirmed last year when the state Supreme Court in San Francisco unanimously ruled that local jurisdictions have authority to prohibit medical marijuana despite its legality at the state level.

But San Bernardino, population 209,924, has other problems. In 2012, it declared bankruptcy, at the time becoming the largest city in the U.S. to do so.

Mulvihill insists his own support for the dispensaries is quite narrow.

“I’m doing this because of the trouble we’re in -- we can’t control it,” he said. “I’m not doing this for potheads.”