The Latest Fiscal Buzz? Medical Marijuana
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The Latest Fiscal Buzz? Medical Marijuana
Posted by CN Staff on July 15, 2010 at 14:58:38 PT
By Christopher Palmeri and Michael Marois
Source: Business Week
California -- Here's a sure sign that marijuana dispensaries are on their way to becoming big business: On July 13 the city council of Berkeley, Calif., asked voters to approve a 2.5 percent tax on the city's marijuana outlets, three of which grossed a total of $19 million last year, all cash. "This is huge," says Mayor Tom Bates. The tax will not only help close a $16.2 million budget gap, but it also makes sure that as the sale of pot goes mass market, the local community benefits, not outside business interests, Bates says. "We don't want to have Philip Morris coming in here, sucking up all the money."
Taxing pot sales is a growing trend across the nation as fiscally challenged cities eye the public's budding acceptance of marijuana use. Denver has generated $1.2 million since December, when the city began collecting sales taxes from its 256 dispensaries. On June 15, Washington, D.C., approved a 6 percent tax on what will eventually be five dispensaries.Eighteen states now have laws allowing marijuana use for medical purposes. Nowhere is the revenue opportunity as large as in California. Therapeutic marijuana was originally intended to relieve cancer and AIDS patients' pain and nausea; California now allows it for insomnia, appetite loss, or any condition a licensed physician thinks marijuana would ease. The Board of Equalization, which supervises tax collection in the state, estimated in October that fully legalized marijuana consumption could generate $1.4 billion a year in state and local taxes. On the same night that Berkeley officials acted, the Sacramento City Council passed a similar measure, and the city of Long Beach adopted one on July 6.More Golden State communities may follow if California voters approve a ballot initiative in November that would make it legal to possess an ounce or less of marijuana for recreational use. That measure, known as Proposition 19, allows cities to regulate and tax recreational uses of pot. Recent polls suggest voters are evenly divided in their support for it, although Senator Dianne Feinstein (D-Calif.) on July 12 said she would oppose the measure. If the initiative passes, marijuana advocates and researchers describe a scenario in which drug tourism floods the state, resulting in tasting rooms and specialized bed and breakfasts in the Northern California counties of Mendocino and Humboldt, where the plant is cultivated.Marijuana advocates are conflicted. They want to see more respectability for the drug and at the same time don't want to pay more for it. "We're struggling with this," says Kris Hermes, legal campaign director at Americans for Safe Access, an Oakland (Calif.)-based nonprofit. "We know local governments are cash-strapped and looking for creative ways to raise revenue." Others see taxation as a sign of progress. "Citizens pay taxes, criminals don't," says Steve DeAngelo, the executive director of the Harborside HealthCenter, a marijuana dispensary in Oakland that campaigned for and won a marijuana tax in that city last year. "We should step up to the plate and pay our fair share."The bottom line: Cash-strapped cities increasingly are turning to marijuana dispensaries to raise tax revenue and close budget gaps.Palmeri is a senior correspondent in Bloomberg Businessweek's Los Angeles bureau. Marois is a reporter for Bloomberg News in Sacramento.Source: Business Week (US)Author: Christopher Palmeri and Michael MaroisPublished: July 15, 2010Copyright: 2010 The McGraw-Hill Companies, Inc.URL: bwreader businessweek.comWebsite: Medical Marijuana Archives 
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Comment #4 posted by EAH on July 16, 2010 at 17:47:14 PT:
Common good
A civil society divides and shares the burdens of management, regulation and services costs by collecting taxes. Our society is so complex that someone is always going to be unhappy about something tax money is being spent on.
There are good reasons to be suspicious and distrustful of politicians, but
there's no such thing as a zero tax society.The excise tax in CA for a gallon of wine is 20 cents, a nickel a bottle. It brings in millions. An excise tax for a 10 to 20% THC product of about a dollar an oz would pay for the agency that oversees cannabis licesing, production, testing, labeling etc. That isn't going to hurt anybody. The product should be overseen somehow or all kinds of crap will be sold to consumers. The agency won't be perfect, it hopefully won't be run poorly or create stupid regulations but there has to be something. It just isn't real to expect there will be no excise tax on cannabis. IF it gets legal, there will be one for commercial cannabis. Properly set excise taxes on cannabis would bring in tens or even hundreds of millions but not billions. It has to be low enough to make paying 
it not a big deal. Homegrowers would not pay it. Medical users would pay no sales tax.
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Comment #3 posted by Paint with light on July 15, 2010 at 20:22:38 PT
In my county in Tennessee we have a 9.75% sales tax.Sales tax alone on recreational use should be enough, with a lower rate for industrial, and no tax on medical.Personal use production, and not for profit exchanges should also be exempt.Legal like taxes.
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Comment #2 posted by runruff on July 15, 2010 at 18:36:48 PT
Tax is a single three letter word that can send politicians, and others who partake of the public trough of ever flowing cash, into a frenzy of fantasies about spending.Tax is a small but powerful little word that can build empires and destroy civilizations. Tax is a word that means incomplete freedom. We are controlled by tax, we are indentured by tax. When a politian sees a new tax it is the same as discovering a fat, unused bank account-free money! 
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Comment #1 posted by Sam Adams on July 15, 2010 at 17:41:34 PT
Rocky mountain high
>>>Denver has generated $1.2 million since December, when the city began collecting sales taxes from its 256 dispensaries.Beautiful!!! that horse ain't going back in the barn
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