Pubdate: Wed, 31 Aug 2016
Source: Los Angeles Times (CA)
Copyright: 2016 Los Angeles Times
Author: Patrick McGreevy


A Bill Headed to Brown's Desk Would Give Shops a Six-Month Grace 
Period to Pay $106 Million in Taxes.

SACRAMENTO - Estimating that two-thirds of the medical marijuana 
stores in California have failed to pay sales taxes, state officials 
on Tuesday took a carrot-and-stick approach to persuade pot shops to 
pay the $106 million owed.

With the state preparing to license medical marijuana shops in 2018, 
the Assembly sent Gov. Jerry Brown a bill Tuesday that would 
establish a tax amnesty program to help bring scofflaws into 
compliance with the law.

The measure would allow medical cannabis sellers to temporarily avoid 
a penalty of 25% to 50% on late taxes but would block the issuance of 
new state licenses to any continuing violators.

Assemblyman Mike Gipson (D-Carson), who introduced the bill, said 
many medical cannabis shops have not registered with the state and 
paid taxes for fear of criminal prosecution because marijuana remains 
an illegal substance under federal law.

"You have a lot of businesses that would like to come out of the 
shadows and do the right thing," Gipson said.

Voters legalized the medical use of marijuana in California two 
decades ago; the state has some 2,500 dispensaries.

A recent court decision said federal officials could not spend money 
to prosecute people who comply with state medical pot laws.

Getting businesses to comply with tax laws is also important because 
a measure on the November ballot in California would legalize the 
recreational use of marijuana, potentially resulting in many more 
businesses opening to sell cannabis.

But the main development that led to the amnesty proposal is a new 
regulatory scheme approved last year for the state to issue licenses 
to medical cannabis dispensaries starting in 2018.

"Now that California has officially taken steps to establish a 
regulatory framework for cannabis, we have an opportunity to engage 
these businesses to ensure they pay their dues," Gipson told his 
colleagues, who approved the amnesty program on a 46-13 vote.

The state Board of Equalization, which collects taxes, estimated the 
66% rate of nonpayment of taxes based on the experience of other 
states, including Colorado, officials said.

The six-month amnesty period would run from July 1, 2017, through 
Dec. 31, 2017, and apply to tax liabilities due before Jan. 1, 2015.

Last year's approval of a state regulatory system requiring pot shops 
to get state licenses may be enough to persuade businesses "that 
previously operated underground" to "comply with state tax and 
regulatory laws," David J. Gau, executive director of the board, 
wrote to lawmakers.

Industry officials, including Nate Bradley, executive director of the 
California Cannabis Industry Assn., welcomed the amnesty offer.

"Due to the lack of a legal framework and access to basic banking, 
paying taxes has been extremely challenging for our medical cannabis 
industry," Bradley said. "The tax amnesty program proposed in 
Assembly member Gipson's bill will help existing medical cannabis 
operators more easily transition from operating in an unregulated, 
gray market to a regulated one."

Brown was also sent a bill that allows state licenses to be issued to 
135 pot dispensaries authorized in Los Angeles when voters approved 
Measure D in 2013.

State law requires those applying for state licenses to have a 
license from the city, but the L.A. ballot measure did not provide a 
city license so special eligibility was needed through legislation, 
according to Assemblyman Reggie Jones Sawyer (D-Los Angeles).
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MAP posted-by: Jay Bergstrom