Sales Tax

In October, 2005, California's Board of Equalization (BoE), which deals with state taxation issues, voted to tax monetary transactions involving medical marijuana. ASA is against the taxation of medical marijuana for two main reasons: a) the proposed sales tax is regressive and has the potential to significantly increase cost for medicine, and b) the requirement of providers to report receipts and other information would violate their constitutional right against self-incrimination. On August 10, 2005, ASA attended a public hearing with the BoE, and submitted a position paper on the matter.

On October 25, 2005, the Business Taxes Committee met to review its policy on sales tax of medical marijuana. In its review, the Committee and Board (as the Committee is made up of the entire Board) considered ASA’s position paper and its own BoE issue paper. Ultimately, the BoE decided at that October 25, 2005 meeting to amend its policy to require that all transactions of medical marijuana be subject to sales tax and to require all providers apply for sellers permits. But, because of ASA’s intervention, the BoE adopted a policy that allows providers to omit details of the product being sold in order to avoid self-incrimination. In February 2007, the BoE issued a notice to many of the dispensaries throughout California, explaining their obligation to apply for sellers permits.

In early 2008, ASA and other advocacy groups conducted a study to determine the extent of sales tax revenue collected from the sale of medical marijuana at dispensaries across the state. As a result of that study, it was estimated that in 2007 patients and providers in California contributed more than $100 million in annual sales tax revenue to the state general budget.