State To Tax Medical Marijuana Dispensaries

  State To Tax Medical Marijuana Dispensaries

Posted by CN Staff on October 27, 2005 at 07:18:49 PT
By Brian Seals, Sentinel Staff Writer 
Source: Santa Cruz Sentinel 

Santa Cruz -- The state approved a policy this week that opens the door for medical marijuana distributors to collect and pay state sales tax.The policy, while requiring marijuana retailers to feed state coffers just like department stores or any other California retailer, also considers their unique fear of being targeted by federal authorities because of legal questions surrounding their product.
While California approved medical marijuana in 1996, it remains illegal under federal law.Under the new policy passed by the state Board of Equalization, businesses can get what is known as a sellers permit, allowing them to collect sales tax, without indicating whether their merchandise is lawful to sell.Like the federal government, the state Board of Equalization considers any kind of marijuana sale to be unlawful."We didn't want to inadvertently be in the position of putting medicinal marijuana dealers in a trouble spot," said board member Betty T. Yee of San Francisco.Currently, some retailers of medical marijuana are registered with the board, while others are not.Lee said the move "levels the playing field" for dispensaries that have sought to comply with state tax laws.That was welcome news to Lisa Molyneux, who opened a dispensary in the Harvey West area of Santa Cruz last month."Most of us want to comply with the law and do all we should as a regular business," said Molyneux, who obtained both city business and special-use permits as part of opening the shop on DuBois Street.In agreement was Valerie Corral, co-founder of the area cooperative Wo/men's Alliance for Medical Marijuana, who said such dispensaries should be treated like other businesses. A sellers permit is required to pay sales tax on tangible personal property and up until now those permits were not issued to businesses the board deemed to be engaged in "unlawful" sales. But applying that "unlawful" label to marijuana in California became a bit sticky after it was legalized by voters in 1996 under the Compassionate Use Act."That act was silent on sales," Yee said. "That's where we have a bit of a problem."Another complicating factor was the federal government's view of medical marijuana, Yee said.Allowing businesses to get a permit without stating the legal status of their product was an effort to provide some level of security from federal scrutiny, Lee explained.The state has some data sharing arrangements with the federal government. However, Corral doubts there will be much security from federal bodies."There is no adequate protection against the federal government," she said.At least one medical marijuana advocacy group, Americans for Safe Access, opposed the board's action.That group said any dispensaries should be categorized as "health facilities" where medicine like marijuana would be exempt from taxation.The state believes any revenue realized from sales tax on medical pot would be negligible.Sales taxes generally go into the state's general fund. Local governments may add to the state rate with that portion going to those localities.About 27 medicinal pot operations have sellers permits, according to a Board of Equalization staff report. This week's Board of Equalization vote was 4-1, with a representative for state Controller Steve Westly voting no.A call to Westly's press office was not immediately returned.The five-member board consists of four elected members and the state controller. Source: Santa Cruz Sentinel (CA)Author: Brian Seals, Sentinel Staff WriterPublished: October 27, 2005 Copyright: 2005 Santa Cruz SentinelContact: editorial santa-cruz.comWebsite: Articles & Web Sites:ACLU OKs Medicinal Marijuana Department Cruz Proposes Marijuana Department

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Comment #2 posted by FoM on November 09, 2005 at 08:22:21 PT
Medical Marijuana Office OK'd by City
November 9, 2005 Santa Cruz -- In a 4-3 vote Tuesday, the City Council decided to establish an Office of Compassionate Use to allow easier and safer access to medical marijuana for seriously ill residents.Council members Cynthia Mathews, Ryan Coonerty and Ed Porter opposed the ordinance.The city-run medical marijuana office would be established only after approval from the federal government, which many say is unlikely because federal law deems marijuana an illegal, dangerous drug.California residents legalized marijuana for medical reasons in 1996.
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Comment #1 posted by FoM on October 27, 2005 at 21:37:21 PT

Related Article from SHNS
Santa Cruz OKs City Pot Strategy By Kathleen SullivanOctober 27, 2005SANTA CRUZ, Calif. -- The Santa Cruz City Council has voted to create a city department to distribute medical marijuana, a move city leaders hope will bolster its chances of winning a lawsuit that would legalize the use of medicinal pot. The ordinance, which will not go into effect unless a federal court allows it to proceed, passed by a 4-2 vote Tuesday. "We think the fact that the city, an arm of government, wants to do this will get us a much clearer hearing from the federal court," said Mayor Mike Rotkin. "The court will be forced to confront the states-right argument in the 10th Amendment to the U.S. Constitution, and to answer the question whether the federal government has the right to regulate medical marijuana use at all." The 2003 lawsuit was filed in U.S. District Court in San Jose by the Wo/Men's Alliance for Medical Marijuana. The federal government raided the Santa Cruz cooperative's farm in 2002, and the alliance _ joined by the city and county of Santa Cruz _ sued the U.S. Justice Department and the U.S. Drug Enforcement Agency, claiming the Constitution bars the federal government from interfering with patients' rights to grow and use medical marijuana. The U.S. Supreme Court in June ruled that federal authorities can prosecute medical marijuana users despite Proposition 215, the state's voter-approved ballot initiative that legalized cannabis for medicinal purposes in 1996. Rotkin said the city wants to distribute medical marijuana itself because existing entities _ the cooperative and a pot club _ cannot meet the needs of residents, and because people who use medicinal pot live under the constant threat that "the feds can swoop in and arrest them" at any time. Santa Cruz Councilmember Tim Fitzmaurice, who voted in favor of the ordinance, said the city has made the "commonsense decision" that marijuana is a medicine that should be available to people who are ill. "Many people would like to see this issue dealt with in a much more organized way," Fitzmaurice said. "People are a little afraid of the lack of discipline that surrounds the use of the stuff. Generally speaking, if we could find a way to have marijuana delivered through pharmacies in effective doses, I think support would be a lot more widespread." Councilmember Cynthia Mathews, who voted against the ordinance, said she has long supported the use of medical marijuana, but described the idea of creating a city department to distribute medicinal pot as "unwise, unworkable and unrealistic at a time when the city's resources are incredibly strapped." A spokesman for the U.S. attorney's office in San Francisco declined to comment on the Santa Cruz ordinance. Hilary McQuie, communications director of Americans for Safe Access, a medicinal marijuana advocacy organization based in Oakland, Calif., said the group appreciates the position the Santa Cruz City Council has staked out. "However, they know and we know that the federal government is not going to approve a city department distributing marijuana until the federal government changes the classification of marijuana in the Controlled Substances Act," she said. "It's not a wasted effort. But on a practical level, it's not going to provide medicine for patients." Currently, marijuana is included in the same classification as heroin, as a dangerous, highly addictive drug with no accepted medical uses, she said. The group was one of several that petitioned the federal government to reclassify marijuana in 2002. Distributed by Scripps-McClatchy Western Service -- http://www.shns.com

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