Decision on taxation of MMJ in CA

Hi all,

This morning, the Business Tax Committee of the California Board of Equalization
met to discuss the taxation of medical marijuana. A decision was made by the
committee to issue seller's permits to those providing medical marijuana to
patients. The next step before any tax scheme is implemented is a full vote of
the Board.

ASA submitted a position paper on the matter August 10, 2005:
<http://www.safeaccessnow.org/downloads/taxposition.pdf>.

ASA has made its case for opposing altogether the taxation of medical marijuana,
but since the Board of Equalization is eager to tax this activity, ASA
fine-tuned its opposition to mitigate the potential harm from patients
relinquishing their right against self-incrimination.

Today's decision came down to two proposals: a staff proposal and Board Member
Yee's proposal. Excerpts from these proposals are appended below, but it boils
down to very similar proposals to issue seller's permits for the "sale" of
medical marijuana. Arguably, the staff proposal more clearly explained that the
state was looking to tax retail sales rather than ALL sales of medical
marijuana. One significant difference was that Yee's proposal would require that
the seller's permit indicate that the sales were directly related to medical
marijuana. ASA contends that this would violate patients' right against
self-incrimination, and instead (if taxation is inevitable) ASA favors anonymity
with regard to the product being sold. The staff proposal better addressed this
concern.

Five people appeared to testify: Jim Lohse of Area 420, a patient from Area 420
(didn't catch the name), Nathan Sands of Compassionate Coalition, Randelyn
Webster of the San Francisco Patients’ Cooperative, and myself. While Yee's
proposal officially acknowledged the sales of medical marijuana, and thereby
provides some legitimacy to the act, the danger of self-incrimination was too
great to support it.

As such, ASA testified that it opposed taxation altogether and that while Board
Member Yee had the best intentions, her proposal would result in a violation of
patients' right against self-incrimination. After approximately 5 minutes of
deliberation, the Committee voted 4-1 in favor of the staff proposal. The one
opposing vote came from a Board Member who favored the status quo (no policy).
This means that the full Board will now take up the issue and vote sometime in
the next few months.

So, even though we did not win the battle against taxation of medical marijuana,
we have significantly limited the potential harm from such taxation. If approved
by the full Board, the staff proposal would encourage (not mandate) that retail
sellers of marijuana apply for permits, but not require the seller to specify
the product being sold.

Kris
____________________________

Link to the BoE report: <http://www.safeaccessnow.org/downloads/BoE_Report2.pdf>

Excerpts:

Staff recommendation
A seller’s permit shall be issued to any person who requests one for the sale of
tangible personal property the gross receipts from the retail sale of which are
required to be included in the measure of sales tax. In general, the person
requesting the permit must complete a seller’s permit application and provide
the information necessary for the Board to administer the state’s sales and use
tax laws.

Yee recommendation
A seller's permit shall be issued to any person who requests one for the sale of
marijuana for medical purposes to a patient or primary caregiver upon the
recommendation of a physician, as provided for in the Compassionate Use Act of
1996 and the Medical Marijuana Program Act. In general, the person requesting
the permit must complete a seller's permit application and provide the
information necessary for the Board to administer the Sales and Use Tax Law.

--
Kris Hermes
Legal Campaign Director
Americans for Safe Access
http://www.SafeAccessNow.org
1322 Webster Street, Suite 208
Oakland, CA 94612
Phone: 510-251-1856 x307
Fax: 510-251-2036
Email: kris [at] SafeAccessNow.org

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