Lawmaker wants pot growers, sellers to get license
February 02, 2010
Marcus Wohlsen, Associated PressA California lawmaker is proposing to require all marijuana growers and sellers to be licensed by the state as a way to increase sales tax revenue. Democratic state Sen. Ron Calderon said Wednesday he plans to introduce a bill requiring all legal and illegal marijuana businesses to register with the Board of Equalization, the state agency that collects sales tax.
The bill would not legalize marijuana beyond current state law.
Supporters say the measure is intended mainly to provide a system of regulation for medical marijuana dispensaries. Such dispensaries already are required to pay sales tax like other businesses, but board vice chair Jerome Horton says many don't comply.
"There is a clear indication that many dispensaries are intentionally evading their taxes, distributing illegal products and may be laundering illegally acquired money," Horton said in a statement.
Licensees would have to pay a fee, prepay part of the sales tax and pay an excise tax similar to manufacturers, distributors and retailers of tobacco products in the state.
Calderon spokesman Rocky Rushing said the lawmaker estimates full compliance from legal medical marijuana sellers could generate $168 million in revenue.
The Board of Equalization estimates that $1.3 billion worth of marijuana is sold legally in the state every year but only $8 million in sales tax are collected.
Under the current tax code, medical marijuana dispensaries are not required to identify marijuana sales as their primary business, making precise estimates of sales and taxes paid difficult.
Medical marijuana advocates with the group Americans for Safe Access conducted their own study in 2007 that estimated dispensaries contribute closer to $100 million annually to state coffers.
Americans for Safe Access spokesman Kris Hermes said that estimate was calculated when there were 400 dispensaries in the state, a figure that may have as much as tripled with the explosion in the number of dispensaries in Los Angeles.
Hermes' group has long opposed the imposition of sales tax on medical marijuana, saying the drug should be treated like prescribed medications, which are not taxed.
He said he did not see the need for additional tax laws regarding dispensaries, especially if new regulations required them to pay more than they already do.
"I don't know that a piece of legislation is necessary for dispensaries to pay sales tax since that's already a policy," Hermes said. He said requiring growers to register was an even greater concern because of the possibility of self-incrimination.
The proposed legislation is modeled on a law crafted by Horton in 2003 that imposed tighter tax rules as a way to crack down on illegal cigarette sales. That law also provided the Board of Equalization with additional funding to enforce sales tax compliance.
A 2006 report by the California State Auditor found that the cigarette law helped to stem a decline in cigarette sales tax revenue but said the board's own estimates of increased revenues owing to the law were overstated.