HTTP/1.0 200 OK Content-Type: text/html State to Tax Medical Marijuana Dispensaries
Pubdate: Thu, 27 Oct 2005
Source: Santa Cruz Sentinel (CA)
Copyright: 2005 Santa Cruz Sentinel
Author: Brian Seals, Sentinel staff writer
Cited: Wo/Men's Alliance for Medical Marijuana
Bookmark: (Cannabis - Medicinal)
Bookmark: (Cannabis - California)


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

However, Corral doubts there will be much security from federal

"There is no adequate protection against the federal government," she

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

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

The five-member board consists of four elected members and the state
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