Medical Marijuana Providers Call on State to Protect Tax Revenue

March 19, 2008
Yesterday, I joined advocates and providers in Sacramento to call on the State Board of Equalization to protect an important source of revenue - $100 million in sales tax collected annually by medical marijuana dispensaries. After waiting through half a dozen unrelated tax cases to be heard before the board, I testified, explaining how this tax revenue is in danger, due to increased federal interference in the state medical marijuana program. In 2007 alone, the DEA raided more than 50 medical marijuana providers, and they embarked on a new strategy, sending more than 300 letters to landlords of dispensaries, threatening property owners with criminal prosecution and asset forfeiture. I also described reactions from elected officials - ranging from a statement by US House Judiciary Committee Chair John Conyers questioning the DEA's tactics to State Senator Carole Migden's introduction of SJR 20, which calls for an end to federal interference and urging Congress and the President to establish policy consistent with the compassionate use laws of California. I concluded my comments with a plea that would be echoed by all of the following advocates, asking the BOE to work with the Governor and state legislature to protect this source of state revenue, which has become increasingly vital to our state's fiscal health in the face of budget cuts to important state programs. Dale Gieringer of CA NORML spoke next, highlighting the amount of sales tax and income tax dispensaries contribute. He also discussed the problem of the DEA seizing assets from dispensaries. For example, the "Compassion Center for Alameda County paid $3 million in sales taxes before it was closed by the DEA on October 30th. In the process of seizing CCAC's bank account, the DEA stopped a $348,078.49 bank transfer to the Board of Equalization, which the CCAC had transmitted just before the raid." Next, half a dozen current and former dispensary operators spoke about their experiences of DEA harassment. Lisa Sawoya, former director of Hollywood Compassionate Care in Los Angeles, explained that she had gladly paid sales tax to the state. But in July of 2007, her landlord - who had previously been very supportive - received a threatening letter from the DEA. Sawoya agreed to shut down the dispensary at the end of July, and her landlord subsequently called the DEA to tell them of the agreement. Then, on July 25th - days before she was set to close - eight DEA agents stormed into the dispensary, holding guns to employees heads, and seizing all of the money and medicine at the facility. Bill Pearce, former director of River City Patients' Center in Sacramento, explained that he too had willingly paid taxes - to the the tune of $700K over three years to the BOE and another $250K to the IRS and Franchise Tax Board. When the DEA raided him on September 26, 2007, they seized all of his assets, leaving him with nothing to support himself and his family, let alone to pay his legal bills. Four other dispensary operators from Berkeley, San Francisco, Santa Cruz, and Santa Rosa, told their stories of DEA harassment, and explained that though they continue operating their dispensaries, they live in fear. Their landlords could evict them at a moment's notice, or worse, the DEA could raid them, seize their assets, and they could face federal charges. All of the BOE members seemed to listen closely, and I could hear exclamations from those seated in the audience who had not been aware of this dire situation. After we spoke, BOE Member Betty Yee addressed the Board, conveying the sense of responsibility and obligation she felt on this issue. She expressed her concern, not only for the tax revenue generated by dispensaries, but also for the patients who depend on these facilities for access to their medicine. She urged the BOE to work with state officials to ensure protection of dispensaries from DEA attacks, echoing the statements she made in a recent opinion piece co-authored by Senator Migden. I left the meeting feeling that we had been listened to and that the BOE may take further steps to protect our community.
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