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CA in Bid To Impose 7.25% Sales Tax on Cannabis
04.09.07|Scotsman com

For decades, smoking marijuana has been an illicit affair, a key anti-establishment ritual for America's counter-culture underground.

But the legalisation of the drug for medicinal purposes in California has presented its advocates with a dilemma: to remain firmly on the wrong side of the law or accept a demand to pay taxes on its sale.

Marijuana prescribed by a doctor for health reasons was decriminalised in a state-wide referendum in 1996 and has grown into a billion-dollar industry.

About 25,000 patients and carers are now members of the so-called pot clubs.

Chris Moscone, an attorney who represents the Hemp Centre, a San Francisco dispensary, said: "There are basically two camps: those that want to be treated like legitimate businesses, and the other side, who are still rebels and don't want to be taxed."

The situation is further clouded by differences between federal and state law. California's 150 to 200 owners of medicinal marijuana dispensaries have operated legally under state law since 1996 - but illegally under federal law.

And while a demand from state authorities to pay tax is seen by some as further legitimising their business in terms of the state laws, many dispensary owners fear the tax is self-incriminating and will result in punitive measures from the federal government.

The dispensaries have received a state notice urging them to obtain a sales permit for tax reasons. Every purchase of marijuana, which can be bought with a doctor's prescription, would be subject to California's 7.25 per cent sales tax.

But there appears to be substantial resistance among dispensaries to the idea - only 27 dispensary owners currently have a sales permit.

But financial considerations rather than counter-culture affectation may be the reason. Kris Hermes, of Americans for Safe Access, a medical marijuana advocacy group, said more dealers would probably agree to pay the tax if the bill did not include a provision for back taxes on sales over the past eight years.

The federal Marijuana Tax Act of 1937, introduced by Harry Anslinger, an anti-cannabis campaigner and commissioner of the Federal Bureau of Narcotics, stipulated anyone dealing in the substance had to pay one dollar for each trade, or be fined up to $2,000. This effectively criminalised dealers and led to a nationwide crackdown.

In 1970, federal authorities recognised cannabis as a Schedule 1 narcotic under the Controlled Substances Act.

Last year, the Supreme Court upheld federal authority to prosecute the possession and use of marijuana for medical purposes.

The state of California, however, decriminalised marijuana in 1976 and the 1996 Compassionate Use Act established its use for conditions including cancer, MS and AIDS.

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reggie_the_dog

This is great. Once the state of California realizes how much money they make in taxes off of medicinal cannbis they will likely realize how much more money they could make off of recreational cannabis. Hopefully medical cannabis will soon be taxed in CA.

Buzzby

I see a third position: medical marijuana is basically a prescription drug and prescription drugs aren't taxed. Marijuana for recreational purposes should be taxed like any other commodity. Legalize it and tax it. Don't penalize medical marijuana users because their medicine can't be prescribed under federal law.

I thought ex post facto laws were unconstitutional. How can they expect retailers to pay taxes on sales that were not taxable at the time they were made?

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Sofa King

I paid tax the last time I ordered. About 2 weeks ago.

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