San Jose still considers all of the city's 100 or so medical marijuana shops to be unlawful nuisances, but officials will welcome the pot providers to City Hall on Monday to talk about a new program of great interest to the broke city: a marijuana tax.

Starting Tuesday, San Jose will slap a 7 percent tax on marijuana dispensaries under a measure voters overwhelmingly approved in November.

The city -- which has emerged as a key battleground in the state's "green wars" over medical marijuana regulation -- isn't the only cash-strapped municipality with growing interest in getting a cut of the action.

Oakland and Berkeley raised their marijuana taxes in November. And state authorities last week made clear marijuana isn't exempt as medicine from sales taxes and demanded $6.4 million from a Berkeley dispensary.

San Jose officials argue that the tax man must be paid regardless of a business's legal status. And though most local dispensaries already are paying city business and California sales taxes, city officials feel they're not getting their fair share.

"We believe we're being grossly underpaid," Deputy City Manager Deanna Santana said.

For the city's medicinal marijuana providers, the whole situation seems surreal.

"It's in the code that you have to tax these businesses, but you don't have to -- even when you take their money -- say they're legitimate businesses," said David Hodges, who founded the San Jose Cannabis

Buyers Collective, which relocated after city code enforcers threatened to fine its landlord.

San Jose has seen the number of dispensaries soar from zero to about 100 in the less than two years since Councilman Pierluigi Oliverio suggested the city consider allowing and taxing a limited number of them. Voters, who have seen city services pared to close chronic deficits, approved the Oliverio-sponsored marijuana tax, Measure U, by 78 percent in November.

With San Jose facing a $110 million deficit in a 10th straight year of red ink, city officials are eager to start collecting the new tax even though zoning regulations allowing medical marijuana dispensaries are months from coming to a council vote. The city has invited pot providers to a seminar Monday at City Hall to learn about the new tax.

Many of the city's medical marijuana shops, however, are bristling.

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