Jim Finnel
Fallen Cannabis Warrior & Ex News Moderator
The state Board of Equalization wants to make it perfectly clear: Pay sales taxes on marijuana or risk prosecution.
"The sale of medical marijuana is not exempt from sales tax," said board Chairman Jerome E. Horton. Nor do illegal sales exempt people from paying taxes, he said.
That's not new, but the board has launched a new effort to clarify regulations, both for its own employees and medical pot distributors.
The clarification, combined with a crackdown on dispensaries that have not been paying sales taxes, could reap billions of dollars for the state, Horton said.
This week, the board ruled Berkeley Patients Group Inc. owes $6.4 million for failing to pay sales tax on marijuana sales between 2004 and 2007.
The group had claimed its marijuana was not taxable because it is medicine, but there is no such tax exemption, Horton said.
The tax problem was uncovered through an audit triggered when staff noted the dispensary reported more than $2 million a year in revenue but claimed most of it was exempt, he said.
It's not known how many other pot dispensaries fail to collect sales taxes because the Board of Equalization does not have a code for marijuana sales and there has been a widespread culture of "don't ask, don't tell" among its staff members, an issue raised during the Berkeley case.
"To my surprise, we have no idea" how much tax money the state gets from medical marijuana sales nor how much it could be losing in revenue, Horton said.
Some staff members reportedly discouraged medical marijuana sellers from applying for a state permit because they believed marijuana sales are illegal, he said. The board has clarified the issue for staff, Horton said.
Dispensaries that have not been paying sales tax could soon find themselves in the same situation as the Berkeley cooperative.
Board of Equalization offices in Southern California have begun comparing city and county medical marijuana dispensary permits with state permits to see who is paying and who is not, Horton said.
He expects similar audits will be undertaken statewide.
That won't be a problem for most legitimate medical marijuana dispensaries, said Dale Gieringer, state coordinator for the National Organization for the Reform of Marijuana Laws.
Before 2007, many growers were unsure whether they needed to pay sales tax, but it has since been clarified, he said.
"We pay about $120,000 a year in sales tax," said Jim Hill, president of a 3,500-member cooperative. Its marijuana is grown in Mendocino County but most of its members are in Southern California, he said.
The cooperative also pays about $14,000 a month in payroll taxes, he said.
Matt Cohen, who manages another Mendocino County cooperative, estimated he pays more than $100,000 a year in sales taxes. It distributes marijuana to about 1,000 members in nine Bay Area counties.
"We incorporated in '09 and we've been paying it the whole time," he said.
NewsHawk: Jim Behr: 420 MAGAZINE
Source: Press Democrat, The (Santa Rosa, CA)
Copyright: 2011 The Press Democrat
Contact: letters@pressdemocrat.com
Website: The Press Democrat
Details: MapInc
Author: Glenda Anderson
"The sale of medical marijuana is not exempt from sales tax," said board Chairman Jerome E. Horton. Nor do illegal sales exempt people from paying taxes, he said.
That's not new, but the board has launched a new effort to clarify regulations, both for its own employees and medical pot distributors.
The clarification, combined with a crackdown on dispensaries that have not been paying sales taxes, could reap billions of dollars for the state, Horton said.
This week, the board ruled Berkeley Patients Group Inc. owes $6.4 million for failing to pay sales tax on marijuana sales between 2004 and 2007.
The group had claimed its marijuana was not taxable because it is medicine, but there is no such tax exemption, Horton said.
The tax problem was uncovered through an audit triggered when staff noted the dispensary reported more than $2 million a year in revenue but claimed most of it was exempt, he said.
It's not known how many other pot dispensaries fail to collect sales taxes because the Board of Equalization does not have a code for marijuana sales and there has been a widespread culture of "don't ask, don't tell" among its staff members, an issue raised during the Berkeley case.
"To my surprise, we have no idea" how much tax money the state gets from medical marijuana sales nor how much it could be losing in revenue, Horton said.
Some staff members reportedly discouraged medical marijuana sellers from applying for a state permit because they believed marijuana sales are illegal, he said. The board has clarified the issue for staff, Horton said.
Dispensaries that have not been paying sales tax could soon find themselves in the same situation as the Berkeley cooperative.
Board of Equalization offices in Southern California have begun comparing city and county medical marijuana dispensary permits with state permits to see who is paying and who is not, Horton said.
He expects similar audits will be undertaken statewide.
That won't be a problem for most legitimate medical marijuana dispensaries, said Dale Gieringer, state coordinator for the National Organization for the Reform of Marijuana Laws.
Before 2007, many growers were unsure whether they needed to pay sales tax, but it has since been clarified, he said.
"We pay about $120,000 a year in sales tax," said Jim Hill, president of a 3,500-member cooperative. Its marijuana is grown in Mendocino County but most of its members are in Southern California, he said.
The cooperative also pays about $14,000 a month in payroll taxes, he said.
Matt Cohen, who manages another Mendocino County cooperative, estimated he pays more than $100,000 a year in sales taxes. It distributes marijuana to about 1,000 members in nine Bay Area counties.
"We incorporated in '09 and we've been paying it the whole time," he said.
NewsHawk: Jim Behr: 420 MAGAZINE
Source: Press Democrat, The (Santa Rosa, CA)
Copyright: 2011 The Press Democrat
Contact: letters@pressdemocrat.com
Website: The Press Democrat
Details: MapInc
Author: Glenda Anderson
