Taxation


December 3, 2009 – Marijuana is California’s largest agricultural commodity with $14 billion in sales yearly, distancing itself from the state’s second largest—milk and cream—which bring in $7.3 billion a year. But California’s coffers only receive a fraction of the marijuana sales, $200 million coming from the sale of medical marijuana. That could all change with Assemblyman Tom Ammiano’s (D-San Francisco) Marijuana Control, Regulation and Education Act (AB 390).

Since February, when the bill was introduced, it has made little headway in the Legislature. But in October, a hearing on the bill was held by the Public Safety Committee; marking the first time a legislative committee held a hearing on marijuana legalization.

AB 390 would create a system that would regulate marijuana much like alcohol is regulated. Those over the age of 21 could purchase pot from vendors with licenses to do so. The state’s Legislative Analyst and the Board of Equalization have estimated that pot sales could bring up to $1.3 billion in revenue yearly. That number is based off a proposed $50-per-oz. levy placed on marijuana purchases and sales tax.

With a projected deficit of $20 billion facing the state next fiscal year, sources of guaranteed revenue are needed. But there are those that believe that the social issues legalizing pot could have far outweigh any economic benefits.

“Why add another addictive element to our society? I don’t think we should criminalize marijuana, but I don’t think having marijuana where you can buy it like cigarettes or alcohol is something we ought to be doing as a society. I believe we are moving in the wrong direction on that,” said Steve Francis, a former San Diego mayoral candidate and founder of the site KeepComingBack.com—a site that focuses on news and research of alcohol and drug addiction.

Francis says that legalizing marijuana would ultimately cost the state money. He cited a report issued by the Marin Institute that found the economic cost of alcohol use is $38 billion annually, with the state covering $8.3 billion for health-care treatment of alcohol-caused illnesses, plus crime costs, traffic incidents and reduced worker productivity. The taxes and fees collected from alcohol sales only cover 22 percent of total government costs. He says there is every reason to believe the same would happen with marijuana.

“Whatever taxes the author of the legislation thinks we are going to collect on the taxation of marijuana will be very little compared to the social costs on California,” he said.

But the economic impact legalizing marijuana could have goes beyond taxation. Nearly a fifth of California’s 170,000 inmates are locked up because of drug-related crimes. Although most are convicted on crimes more severe than possession, legalizing marijuana would save the state $1 billion in law enforcement and corrections costs.

Orange County Superior Court Judge James Gray says the best solution is to repeal the prohibition of marijuana, allowing the substance to become regulated and less available to children.

“We couldn’t make this drug any more available if we tried,” he said in TIME. “Unfortunately, every society in the history of mankind has had some form of mind-altering, sometimes addictive substance to use, misuse, abuse or get addicted to. Get used to it. They’re here to stay. So let’s try to reduce those harms, and right now we couldn’t do worse if we tried.”

Even if California were to legalize marijuana, there are those that believe that the gray area between federal and state law would only widen. Since California’s Compassionate Use Act was passed in 1996, medicinal marijuana has become more accessible to those need it. But it has opened the gates of confusion, as federal laws still consider marijuana illegal. In fact, cannabis is described as a Schedule 1 drug by the federal Controlled Substances Act, meaning it has no medical use and cannot be prescribed by a physician. Many California municipalities have been reluctant to allow medical marijuana dispensaries, even though they were legalized 13 years ago.

There has been some indication that the federal government is starting to ease its control of marijuana. A few days after Ammiano introduced AB 390, U.S. Attorney General Eric Holder announced that states should be allowed to determine their own rules for medical marijuana and that federal raids on dispensaries would stop in California. President Obama’s nomination of Gil Kerlikowske to be the so-called drug czar and head of the Office of National Drug Control Policy indicated that a softer federal stance on marijuana is being taken. Kerlikowske is the former police chief in Seattle, where he made it clear that going after marijuana possession was not a priority for his department.

A vote by the Public Safety Committee on AB 390 is expected in January. Ammiano said the bill could take between a year and two years before it is heard or voted on in the Legislature. Until then, the debate over decriminalizing marijuana will continue amidst one of California’s worst economic times. BY Landon Bright Source.


With a philosophy seemingly diametrically opposed to that of elected law enforcement officials in Los Angeles, the attorney general of Colorado, John Suthers (a Republican), has advised the governor of that state that medical marijuana sales should be regulated and taxed like alcohol and tobacco (and not tax- exempt like pharmaceuticals are, as medical cannabis is not prescribed per se, but “recommended” by doctors). This plan seems consistent with the stark reality in these dark times that state and county governments need to seek new avenues of public funding that will not prove to be politically unpopular. Medical cannabis activists have long been pro-taxation, as it confers legitimacy on the space.

The taxation of medical marijuana sales is something that we hear a lot about in California, and the above graphic gives some idea of how much money would be left on the table should medical marijuana be banned — or merely hounded and harassed out of business– here in Los Angeles. City Atty. Carmen Trutanich and Dist. Atty. Steve Cooley have declared their intentions to continue fighting the medical marijuana dispensaries, but it’s important to keep in mind that 77% of Los Angeles residents indicated that they were for the regulation and taxation of dispensaries, according to a recent Mason-Dixon poll.

No matter what sort of spin you put on the issue, ignoring the revenue-creating potential of taxing cannabis sales — which will continue, legally or otherwise — hardly seems prudent when we live in an era in which local governments can’t afford to fix potholes or hire schoolteachers.

By Richard Metzger Source.

November 16, 2009 – As countless medical-marijuana dispensaries proliferate throughout the state, Colorado Attorney General John Suthers on Monday said “yes” to the question of taxing pot.

“Colorado law is clear: Medical marijuana, in most instances, should be subject to state and local sales taxes,” Suthers said. “This formal opinion should help clear up many of the uncertainties surrounding the taxation of medical marijuana.”

Suthers issued the opinion amid confusion about whether medical pot can be taxed since the drug is still illegal under federal law, but permitted for legal medical use in the state of Colorado under a voter-approved constitutional provision, Amendment 20.

But Suthers added that many other questions surrounding medical marijuana and Amendment 20 will have to be resolved by the courts or Colorado legislators, who are considering new laws to rein in the wildly growing cottage industry.

The U.S. Department of Justice’s recent announcement that users and providers of medical marijuana won’t be prosecuted if they comply with state law has kindled interest in the drug as a business opportunity.

In Colorado, where voters approved Amendment 20 in 2000, the Justice Department’s announcement has fired up interest in medical marijuana dispensaries — establishments that cultivate and distribute marijuana for patients with certain medical conditions.

But the relaxed stance from the feds left some uncertainty about whether dispensaries can be taxed for selling their product.

Denver City Councilman Charlie Brown wants to subject dispensaries to a 3.62 percent sales tax — providing some much needed dollars for the city. But some law enforcement officers questioned the legality of collecting tax on a substance that is still considered illegal under federal law.

Although prescription drugs are exempt from taxation under Colorado law, Suthers noted that because medical marijuana is not a drug that is regulated by the Food and Drug Administration, it isn’t prescribed. Therefore, doesn’t fall under the exemption. by Bob Mook. Source.

October 27, 2009-SAN FRANCISCO — These are heady times for advocates of legalized marijuana in California — and only in small part because of the newly relaxed approach of the federal government toward medical marijuana.915692621578182322b5790tr1

State lawmakers are holding a hearing on Wednesday on the effects of a bill that would legalize, tax and regulate the drug — in what would be the first such law in the United States. Tax officials estimate the legislation could bring the struggling state about $1.4 billion a year, and though the bill’s fate in the Legislature is uncertain, Gov. Arnold Schwarzenegger, a Republican, has indicated he would be open to a “robust debate” on the issue.

California voters are also taking up legalization. Three separate initiatives are being circulated for signatures to appear on the ballot next year, all of which would permit adults to possess marijuana for personal use and allow local governments to tax it. Even opponents of legalization suggest that an initiative is likely to qualify for a statewide vote.

“All of us in the movement have had the feeling that we’ve been running into the wind for years,” said James P. Gray, a retired judge in Orange County who has been outspoken in support of legalization. “Now we sense we are running with the wind.”

Proponents of the leading ballot initiative have collected nearly 300,000 signatures since late September, supporters say, easily on pace to qualify for the November 2010 general election. Richard Lee, a longtime marijuana activist who is behind the measure, says he has raised nearly $1 million to hire professionals to assist volunteers in gathering the signatures.

“Voters are ripping the petitions out of our hands,” Mr. Lee said.

That said, the bids to legalize marijuana are opposed by law enforcement groups across the state and, if successful, would undoubtedly set up a legal showdown with the federal government, which classifies marijuana as an illegal drug.

California was the first state to legalize marijuana for medical purposes, in 1996, but court after court — including the United States Supreme Court — has ruled that the federal government can continue to enforce its ban. Only this month, with the Department of Justice announcement that it would not prosecute users and providers of medical marijuana who obey state law, has that threat subsided.

But federal authorities have also made it clear that their tolerance stops at recreational use. In a memorandum on Oct. 19 outlining the medical marijuana guidelines, Deputy Attorney General David W. Ogden said marijuana was “a dangerous drug, and the illegal distribution and sale of marijuana is a serious crime,” adding that “no state can authorize violations of federal law.”

Still, Mr. Lee anticipates spending up to $20 million on a campaign to win passage of his ballot measure in California, raising some of it from the hundreds of already legal medical marijuana dispensaries in Los Angeles, which have been recently fighting efforts by Los Angeles city officials to tighten restrictions on their operations.

“It’s a $2 billion industry,” Mr. Lee said of the medical marijuana sales.

Opponents said they are also preparing for a battle next year.

“I fully expect they will qualify,” said John Lovell, a Sacramento lobbyist for several groups of California law enforcement officials that oppose legalization.

Any vote would take place in a state where attitudes toward marijuana border on the schizophrenic. Last year, the state made some 78,500 arrests on felony and misdemeanors related to the drug, up from about 74,000 in 2007, according to the California attorney general.

Seizures of illegal marijuana plants, often grown by Mexican gangs on public lands in forests and parks, hit an all-time high in 2009, and last week, federal authorities announced a series of arrests in the state’s Central Valley, where homes have been converted into “indoor grows.”

At the same time, however, there are also pockets of California where marijuana can seem practically legal already. At least seven California cities have formally declared marijuana a low priority for law enforcement, with ballot measures or legislative actions. In Los Angeles, some 800 to 1,000 dispensaries of medical marijuana are in business, officials say, complete with consultants offering public relations services and “canna-business management.”

Assemblyman Tom Ammiano, a San Francisco Democrat and author of the legalization bill, said momentum for legalization has built in recent years, especially as the state’s finances have remained sour.

“A lot of people that were initially resistant or even ridiculed it have come aboard,” Mr. Ammiano said.

In Oakland, which passed a tax on medical cannabis sales in July, several people who signed a petition backing Mr. Lee’s initiative said they were motivated in part by the cost of imprisoning drug offenders and the toll of drug-related violence in Mexico.

“Personally I don’t see a way of getting it under control other than legalizing it and taxing it,” said Jim Quinn, 60, a production manager. “We’ve got to get it out of the hands of criminals both domestic and international.”

Mr. Lovell, the law enforcement lobbyist, however, said those arguments paled in comparison to the potential pitfalls of legalization, including people driving under the influence. He also questioned how much net revenue a tax like Mr. Ammiano is proposing would actually raise. “We get revenue from alcohol,” he said. “But there’s way more in social costs than we retain in revenues.”

The recent history of voter-approved drug reform laws in California is not encouraging for supporters of legalization. Last November, voters rejected a proposition that would have increased spending for drug treatment programs and loosened parole and prison requirements for drug offenders.

None of which seems to faze Mr. Lee, 47, a former roadie who founded Oaksterdam University, a medical marijuana trade school in Oakland, in 2007. Mr. Lee says he plans to use the Internet to raise money, as well as tapping out-of state sources for campaign money.

More than anything, however, Mr. Lee said he was banking on a basic shift in people’s attitudes toward the drug.

“For a lot of people,” he said, “it’s just another brand of beer.” Source.

October 9, 2009 – Los Angeles County Dist. Atty. Steve Cooley said Thursday he will prosecute medical marijuana dispensaries for over-the-counter sales, targeting a practice that has become commonplacePicture 2 under an initiative approved by California voters more than a decade ago.

“The vast, vast, vast majority, about 100%, of dispensaries in Los Angeles County and the city are operating illegally, they are dealing marijuana illegally, according to our theory,” he said. “The time is right to deal with this problem.”

Cooley and Los Angeles City Atty. Carmen Trutanich recently concluded that state law bars sales of medical marijuana, an opinion that could spark a renewed effort by law enforcement across the state to rein in the use of marijuana. It comes as polls show a majority of state voters back legalization of marijuana, and supporters are working to place the issue on the ballot next year.

The district attorney’s office is investigating about a dozen dispensaries, following police raids, and is considering filing felony charges against one that straddles the Los Angeles-Culver City line.

“We have our strategy and we think we are on good legal ground,” Cooley said.

Medical marijuana advocates say the prosecutors are misinterpreting the law.

“I’m confident that they are not right,” said Joe Elford, chief counsel for Americans for Safe Access. “If they are right, it would mean that thousands of seriously ill Californians for whom the Compassionate Use Act was intended to help would not be able to get the medicine that they need.”

Law enforcement officials have been frustrated by the explosion in the number of dispensaries in Southern California, arguing that most are for-profit enterprises that violate the 1996 voter initiative legalizing medical marijuana and the 2003 state law permitting collective cultivation. Cooley’s announcement, coming at a news conference that followed a training session he and Trutanich conducted for narcotics officers, dramatically raises the stakes.

In the city of Los Angeles, some estimates put the number of dispensaries as high as 800. The city allowed 186 to remain open under its 2007 moratorium, but hundreds of others opened in violation of the ban while the city did nothing to shut them down.

In August, Cooley and Sheriff Lee Baca sent a letter to all mayors and police chiefs in the county, saying that they believed over-the-counter sales were illegal and encouraging cities to adopt permanent bans on dispensaries.

Mark Kleiman, a professor of public policy at UCLA and an expert on drug policy, was not surprised that local prosecutors had decided to attack the rapid proliferation of marijuana stores.

“I think it’s a natural response to the rather flagrant marketing practices of a bunch of the dispensaries. The medical veneer has been wearing thinner and thinner,” he said. “I’ve always wondered why those things were legal when they didn’t look legal to me.”

Cooley said he believes that under state law, collectives must raise their own marijuana and can only recoup their costs. “That’s absolutely legal,” he said. “We’re going to respect that.”

But he said none of them currently do that.

The district attorney’s warning could make the situation more chaotic in Los Angeles, where the City Council has struggled for two years to devise an ordinance to control the distribution of medical marijuana.

In addition to prosecuting dispensaries, Cooley said he would consider going after doctors who write medical marijuana recommendations for healthy people. Medical marijuana critics argue that some doctors freely recommend the drug to people who are not ill.

Medical marijuana advocates celebrated a brief thaw in the enforcement climate after the Obama administration signaled earlier this year that it would not prosecute collectives that followed state law. That spurred many entrepreneurs to open dispensaries in Los Angeles. As stores popped up near schools and parks, neighborhood activists reacted with outrage and police took notice.

Councilman Dennis Zine, a key player on the issue at L.A. City Hall, welcomed Cooley’s decision to prosecute dispensaries. “There are many that are operating illegally and it’s not a secret,” he said, adding that he believes “a few” collectives in the city are operating legally.

Anticipating that police departments will ramp up raids on dispensaries, medical marijuana advocates reacted with dismay to Cooley’s announcement.

“What we’ll see is a big disruption,” said Don Duncan, the California director for Americans for Safe Access. He called Cooley’s decision “incredible” and said, “It certainly sounds scary.”

Duncan acknowledged that many dispensaries do not follow the law and urged Cooley and Trutanich to focus exclusively on them. “You don’t have to cast a net over the entire community, you can target the problem people and not take this extreme adversarial position,” he said. “Some good people are going to be caught in the crossfire.”

About 100 medical marijuana patients, activists and dispensary owners protested on a sidewalk outside the Montebello Country Club, where about 150 prosecutors and narcotics officers met. Motorists repeatedly honked and shook their fists in support as they rolled by, triggering cheers from the crowd.

Barry Kramer, the operator of California Patients Alliance, a collective on Melrose Avenue, said many dispensaries have responsibly regulated themselves for years in the vacuum left by the City Council’s inaction.

“I feel like that gets lost,” he said. “It’s frustrating to get painted with one brush by the city.”

Kramer said he believed that dispensaries would continue to operate. “People have found ways around marijuana laws for as long as there have been marijuana laws,” he said.

But he also said that stepped-up prosecutions could resuscitate the criminal market: “Things will go underground. We’ll see a lot more crime.”

When Californians voted for Proposition 215 in 1996, they made it legal for patients with a doctor’s recommendation and their caregivers to possess and raise pot for the patient’s medical use.

In 2003, the Legislature allowed patients and caregivers “collectively or cooperatively to cultivate marijuana for medical purposes” but said they could not do it for profit.

Cooley and Trutanich, after reviewing a state Supreme Court decision from last year, have concluded that the law protects collectives from prosecution only in the cultivation of marijuana, not for sales or distribution.

Medical marijuana advocates, however, note that the state currently requires dispensaries to collect sales taxes on marijuana, and that guidelines drawn up by the attorney general conclude that “a properly organized and operated collective or cooperative that dispenses medical marijuana through a storefront may be lawful.”

The guidelines allow collectives to take costs into account but do not deal directly with over-the-counter sales.

Jacob Appelsmith, special assistant attorney general, said Atty. Gen. Jerry Brown talked to Cooley on Thursday. “Our staffs are continuing to meet about these issues,” he said.

Source. By John Hoeffel

September 27, 2009 – SAN FRANCISCO — Pot advocates started their push Friday to get a marijuana legalization measure on California’s 2010 ballot with backing from a prominent statePicture 7 politician.

Former state Senate president Don Perata announced his support for the Tax Cannabis 2010 campaign, which began gathering signatures for the proposal at the annual meeting of the National Organization for the Reform of Marijuana Laws.

Supporters need nearly 434,000 signatures to make the November 2010 ballot.

Though Perata did not appear as scheduled at a news conference launching the signature drive, he said in a statement that taxing legal marijuana was key to easing California’s financial woes.

“In this time of economic uncertainty, it’s time we thought outside the box and brought in revenue we need to restore the California dream,” he said.

Term limits forced Perata from the Legislature in 2008. He announced in March that he planned to run next year for mayor of Oakland, where voters in July overwhelmingly passed a first-of-its-kind tax on city medical marijuana dispensaries.

Pot dispensary owners who supported the tax as a way to show their commitment to the city included Richard Lee, the ballot measure’s main backer.

Under the proposal, adults 21 and older could legally possess up to an ounce of pot. Homeowners could grow limited amounts, and local governments would decide whether to allow pot sales.

Supporters argue taxes levied on marijuana sales could help strapped cities weather revenue shortfalls caused by the recession and California’s budget crisis.

Lee said he believed the cost of obtaining the needed signatures would run about a dollar per name.

“We’ve raised a good portion of the amount that we need, so we feel real confident that we’re going to get it on the ballot,” he said.

The measure is the most conservative of three pot legalization proposals certified for signature-gathering by California’s Secretary of State.

A group of Northern California criminal defense lawyers is promoting a measure that would set no specific limits on the amount of pot adults could possess or grow for personal use.

The measure would repeal all local and state marijuana laws and clear the criminal record of anyone convicted of a pot-related offense.

The third measure, proposed by a Long Beach pot activist, would repeal state marijuana prohibitions and give the Legislature a year to adopt new laws regulating and taxing the drug.

The state Legislative Analyst’s Office said all three measures could bring potentially major new revenue to the state from taxing marijuana. The office also predicts the measures would result in tens of millions of dollars in savings of law enforcement costs to state and local governments.

The cost of running California ballot measure campaigns often climbs to eight figures, so supporters of the pot initiatives will need to focus on fundraising.

Some pot activists believe it’s too soon to reach for full-fledged marijuana legalization, a goal the pro-marijuana movement has worked toward for decades.

Backers of the measures hope to tap into what they see as pro-legalization momentum spurred in part by the Obama administration’s hands-off attitude toward states that allow medical marijuana.

If any of the proposals do make the ballot, a Field Poll earlier this year found that a slight majority of state voters supported legalizing and taxing pot.

Mark Kleiman, a professor of public policy at the University of California, Los Angeles, who specializes in drug issues, said he believes Californians may be ready to lift the ban.

“I wouldn’t be stunned. I could see it going either way,” he said. By MARCUS WOHLSEN. Source.

September 10, 2009

Dear Friends of Oaksterdam University…..

I wanted you to be the first to know that we are about to take our cannabis reform movement to the next level: legalizing, taxing, and regulating cannabis in California.

This month we will start gathering signatures to place an initiative on the November 2010 California ballot to allow adults 21 and over to possess small amounts of cannabis, give local governments the ability to tax and regulate cannabis, and help generate billions of dollars in much needed revenue for California.

In order to qualify the initiative for the ballot, we need to gather 650,000 signatures of California voters in the next 150 days, and to do that, we’re going to need your help!

Los Angeles
Sign up today for one of our upcoming volunteer meetings in Los Angeles!

Bring a friend, or two, or ten, meet fellow supporters, and find out how you can help legalize, tax, and regulate cannabis in California.

Please join us at: 7:30 PM, Friday, September 11th
Patient ID Center (Host of Oaksterdam University – Los Angeles)
470 S. San Vicente Blvd
Los Angeles, CA 90048

Oakland
Sign up today for one of our upcoming volunteer meetings in Oakland!

Bring a friend, or two, or ten, meet fellow supporters, and find out how you can help legalize, tax, and regulate cannabis in California.

Please join us at: 7:00 PM, Monday, September 14th
Oaksterdam University
1776 Broadway
Oakland, CA 94612

Historic Battle
This is going to be an epic, historic battle for cannabis reform in California, and we are going to need every supporter involved, so please sign up for one of our volunteer meetings today!

Together as faculty, staff, students, and volunteers from Oaksterdam University, we have worked to pass local ballot measures to reform cannabis laws in cities all over our state. Now it’s time to take our movement to the next level: reform on the statewide level.

Please sign up to get involved today.

Thank you,

Richard Lee, President, Oaksterdam University

P.S. If you can’t make it this Friday, or live outside Los Angeles, please sign up at www.taxcannabis.org to find out about future events.

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