As one of California's pioneering marijuana dispensaries, the Berkeley Patients Group served thousands of medical marijuana users and handled tens of millions of dollars in pot transactions a year.
But until 2007, the dispensary didn't charge customers sales taxes nor did it pay them to the state, contending that marijuana as medicine wasn't taxable.
California tax officials, strapped for cash, disagreed and now the State Board of Equalization is ordering the Berkeley facility to pay $6.4 million in back taxes and interest on $51 million in pot sales between 2004 and 2007.
The case is illuminating efforts by the state – plus Sacramento and other cities – to collect revenue from California's burgeoning medical cannabis industry.
Since last October, the state tax board has completed audits on 32 other marijuana dispensaries, demanding $4.5 million in sales taxes and interest.
In September, the board ordered another Berkeley medical marijuana outlet, Community Flavor, to pay $600,000 in taxes and interest on $4.9 million in marijuana and $670,000 in pot cookie sales the dispensary argued were exempt from taxes between 2005 and 2008.
"It is our intent to identify where there could be a problem and then aggressively go in and enforce the law," said BOE Chairman Jerome Horton. "You will see a lot more investigations to assist them in complying with law."
The BOE estimates it takes in $57 million to $105 million in sales taxes as dispensaries ring up as much as $1.3 billion in annual pot transactions.
15 comments:
I feel that there should be taxes imposed by the dispensary on the customers sales. But i feel it is wrong to charge the taxes once the time has passed by. How can you make someone pay the taxes once the time period is over and on top of that the tax amount is way too much. But on the other way it is good as there will be good investigation and no misuse of it.
So they suddenly like pot do they? I thought everyone said this was a "bad" drug huh? It has enormous potential for tax revenue, and should be exploited as a source. The problem is they need to get their facts straight on what kind of drug it is, and if it should be legal for everyone. Pot is not one of the "hardcore" drugs, and wont hurt the society too much.
Honestly, anybody in the state of California can get "medical" marijuana regardless of their medical condition. People consume marijuana for recreational purposes and it should be taxed just like tobacco and alcohol. However, I think it would be difficult to collect back taxes from these pharmacies who are selling under the guys of medicine. They need to call it for what it is- which is marijuana for pleasure and then tax it.
Something about that picture... Hah- wow
This seems like a useful way to collect some taxes. Good job cal cal. I feel like pot has the same affect as insulin- no matter the price; beach-baked suffers (with all of thier medical problems...) will by it regardless.
On the one hand, it seems unlikely that someone could successfully tax something that is technically "medical." On the other hand, it's pretty common knowledge that weed in California is rarely actually used medicinally. By all means, they should go ahead and tax them; California could use the money.
hmm,so much money is going into marijuana for patient purposes. now back taxes are shooting through the roof, as well as the prices for getting the marijuana. crazy talk. maybe, there are other ways of like doing this for patients or something without having to pay so much? idk...
I agree with California thinking that they should tax marijuana stuff because we all know that not all of the purchases of the substance is purely for medical reasons. Plenty of people there have fake prescriptions just so they can get their high and the occasional baked good. Tons of people will buy the stuff regardless of a tax placed on it. Plus, Cali needs to get out of debt so, yeah. This should happen.
I agree with the taxation. It'll help the economy in California, since "Marijuana" is a major business in California it is a smart idea as well. And since it will bring in millions of tax money the tax would help solve some of the budget answer for California and its citizen, while producing more money flow in the economy.
This is very interesting. I remember talking about the legalization of marijuana for economic purposes is Mr.Perkins class, and the conclusion reached was that it wouldn't be a large source of revenue after it was taxed, but it will be very interesting to see if taxing medical marijuana dispensaries relieves economic pressure in California by a large margin. If it does it will be interesting to see if other states follow California' actions regarding marijuana.
Well obviously pot is a good way to make money, people all around the world have been distributing it for money
illegally for years. It was only a matter of time this "medical marijuana" became a popular target for the goernment to try a declare taxes on. I don't see how this is entirely a bad idea. I mean if people were willing to pay for pot when it was only illegal, why shouldnt they still pay now that it's medical? My curiousity only leads me to wonder, will people still want to use medical marijuana if they have to worry about such a high tax? Funny enough, I'm sure they will.
I don't believe it is right for California to just decide to take taxes on the medical Marijuana that has already been sold. Even if they legally have the right to take taxes on them I would think the state would have the respect to not do such a thing. If they had stated form the start that they were going to take taxes it would have been fine but the way they are doing things is just plain rude.
It's no mystery that California is a very strange and diverse, dirt-broke state. The fights for weed legalization and gay marriage has made this the center for many ethic and moral debates but the government is actin a little greedy. They dig themselves into a hole and then they ask all the medically- inclined hippies for tax money they "owe" them for the past couple of years that they didn't need before now... where's all the gov funding from Hollywood and plastic surgeons??
Taxing cannabis dispensaries is a very good idea. If it's legal there, it and it can generate a lot of money for the state, then why not. But why did the dispensaries believe that marijuana was untaxable at the time, or that they were exempt from taxes? Either the dispensaries are playing dumb, or the Cali govt. is just trying to cheat them out of some money.
I don't think that the state or federal govt. should be allowed to place taxes on transactions carried out in the past; it's just a sneaky, unfair way to make money. It seems to me that the state is targeting these dispensaries simply because they deal with medical marijuana, even if it is fully legal.
This is an interesting maneuver by California legislators and one that I believe was long overdue. Considering the difficulty in enforcing laws against the use of drugs, I wonder if it wouldn't be better to open up the market and just place a rigorous tax upon it. Overall, I do think that the dispensers of legal pot should be taxed for I doubt that the majority of clients use it for any medicinal purpose. Though I still question if California can demand back taxes on an item that they did not tax before.
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