A potential cannabis tax study might shed positive light—or darkness
By Christopher Glew
The Cannabis Certification and Regulation Act (SB 626) is a reworking of previous efforts to pass a formal bill to tax marijuana through the State Board of Equalization. The Act was amended in the Senate this past April. It has now become more of a legislative mandate to force a study of the entire medical marijuana enterprise in California and determine the applicability and feasibility of a type of stamp tax analogous to the tobacco tax stamps. The following shows some of the introductory language from the original version and the portions deleted in brackets. The deleted portions are significant since they would have required an exhaustive amount of record keeping and prepayment of the sales tax. Advocates from all corners, including NORML, have vehemently opposed these amendments that create unrealistic conditions mainly because the legislation failed to include any guarantee that these same people would not be prosecuted for unlawful sales per se under Health and Safety Code Section 11359.
“This bill would [create the Cannabis Certification and Regulation Act of 2011 and provide for the certification by the State Board of Equalization of growers, wholesalers, retailers and transporters of cannabis or cannabis products that are engaged in business in California. The bill would require these certificated growers, wholesalers, retailers and transporters to keep records of every sale, transfer or delivery of cannabis or cannabis products,
as specified. The bill would authorize any peace officer and specified employees of the board to conduct inspections, as provided. It would prohibit growers, wholesalers, retailers and transporters from selling or purchasing cannabis or cannabis products without a certificate] require the State Board of Equalization to conduct a study, and submit the results of that study to the Legislature by a specified date, to determine, among other things, the most efficient means to obtain compliance under the Sales and Use Tax Law by sellers of cannabis and cannabis products sellers engaged in business in this state, as provided.
[The bill would provide for the seizure of cannabis or cannabis products that are sold or purchased in violation of specified provisions and impose specified penalties therefore including certificate revocation or suspension, civil penalties and criminal penalties. By imposing criminal penalties, the bill would create a state-mandated local program. The bill would require each wholesaler to prepay the retail sales tax on its gross receipts derived from the sale of cannabis and cannabis products, as specified. This bill would create the Cannabis and Cannabis Products Compliance Fund, as specified.]”
The current language mandates that this study be done and complete by January 2013. The bill acknowledges that as many as 300 collectives have registered for sellers permits to date. Additionally, BOE has reportedly identified over 500 collectives who have not registered. The efforts here could be beneficial if the true intention is to conduct a study to clarify and regulate the distribution of medical marijuana in the State of California. This study has the potential to shed new light on the true humanitarian efforts driving the medical marijuana community. However, if the study becomes limited to a hunt to determine how much money can be generated by taxing without realistic regulation then it is doomed to fail. The inherent problem in the efforts to tax without realistic regulatory safeguards is that it exposes the collectives to taxation without any protection from prosecution for the very act they are being taxed for. Ultimately, this bill could improve the state’s revenue stream, but likely would drive many collectives back underground.
This law on the horizon may clear the way for positive tax studies to be conducted and—most importantly—further intellectual conversations on the topic of medical marijuana. Truly the most damaging thing that can happen to the MMJ community is for the conversation to slow down or stop. So remember: Keep the debate alive.
Christopher Glew is a Southern California attorney who specializes in medical marijuana law and is a partner with the Law Offices of Glew & Kim. You can reach him at (714) 648-0004 or through www.themarijuanalawyer.com.
