Pubdate: Thu, 11 Feb 2016
Source: Press Democrat, The (Santa Rosa, CA)
Copyright: 2016 The Press Democrat
Contact:  http://www.pressdemocrat.com/
Details: http://www.mapinc.org/media/348
Author: Guy Kovner

SEN. MIKE MCGUIRE FLOATS BILL TO INCREASE SALES TAX ON MEDICAL MARIJUANA

State Sen. Mike McGuire, D-Healdsburg, introduced legislation 
Wednesday that would establish a 15 percent statewide sales tax on 
medical marijuana, a move he said was needed to help cover local 
government costs to control the booming cannabis industry.

The tax would be in addition to the existing sales tax - roughly 8 
percent on goods and services - and is expected to generate more than 
$100 million a year, with a 30 percent share available to cities and 
counties for costs associated with medical cannabis.

McGuire called his bill, the Marijuana Value Tax Act, "an important 
second step" to the sweeping regulation of medical marijuana 
cultivation, distribution and sales signed by Gov. Jerry Brown in 
October. That regulatory framework is scheduled for implementation on 
Jan. 1, 2018, and the sales tax would take effect that time, as well, 
if McGuire's bill becomes law.

McGuire, one of the authors of the new regulatory scheme, last year 
signaled his intent to introduce a tax measure on pot sales.

"It's time to help fund the areas that are most affected by 
(marijuana) cultivation - those communities that have long been 
paying the price of the negative effects of cultivation brought on by 
the 'bad actors' who destroy the environment and bring in crime," 
said McGuire, whose North Coast district takes in much of the state's 
famed pot-growing empire.

A prominent Sonoma County-based cannabis trade association said it 
has no objection to a tax on marijuana sales, but contends that a 15 
percent startup rate is too high.

"The market might not be able to bear that," said Tawnie Logan, 
executive director of the Sonoma County Growers Alliance. The 
400-member group would prefer a startup rate of 10 to 12 percent, she said.

With the underlying sales tax, the overall tax rate for medicinal pot 
sales resulting from McGuire's bill would be roughly 23 percent.

McGuire said that Washington state levies a 37 percent state and 
local tax rate on medical and recreational marijuana, and Colorado's 
combined tax rate is 30 percent.

But Logan noted that additional local taxes - which are allowed by 
California's new marijuana laws - could result in an overall rate of 
30 percent.

High taxes, presumably passed on to consumers, will prompt them to 
buy cannabis from black market operators, Logan said, undermining the 
effort to create a legitimate industry.

The state Board of Equalization collected $44 million in sales taxes 
from dispensaries in 2014 - at an average tax rate of 8 percent - and 
estimated that only 25 percent to 30 Percent of the sellers made the 
required payments. Eighteen dispensaries in Sonoma County paid $2.6 
million in taxes on nearly $31 million in retail sales, the board said.

McGuire said that $100 million in annual revenue is a "safe but 
conservative estimate" of the proceeds from the proposed tax. 
Thousands of medical pot dispensaries are expected to apply for state 
licenses, he said, noting that there are as many as 2,000 
dispensaries in the greater Los Angeles area.

Matching the amount set aside for cities and counties, the state 
general fund would get 30 percent of the revenue. State parks would 
get a 20 percent cut, and 10 percent would go to both the state 
Natural Resources Agency to restore damage to public and private 
lands from marijuana cultivation and to county-level drug and alcohol 
treatment programs.
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MAP posted-by: Jay Bergstrom