February 27, 2011

California Tax Man Targets MMJ Patient Group

February 27, 2011
mmj business daily fact book sales medical marijuana recreational

cannabis cash cropBerkeley Patients Group

Berkeley Patients Group, the enormous, thriving pot dispensary, owes the state $6.4 million in back taxes, Berkleyside reports. The Board of Equalization audited the dispensary and found that no sales tax had been paid on medical pot sales from 2004 through 2007. To be fair, it was only in 2007 that the state “clarified a previously ambiguous taxation regime” on medical pot.

Berkeley Patients Group told Berkeleyside that it can’t pay the back taxes and would try to negotiate a compromise. The total bill represents back taxes plus interest.

The story is symbolic of the considerable legal ambiguities around medical pot in California. Are dispensaries non-profit health centers or lucrative for-profit businesses? Dispensaries had in the past tried to make the case that pot should be exempt from sales tax because it’s medicine, but the Board of Equalization clearly thinks otherwise. The BOE, in a difficult-to-read press release wrote that there is “no specific exemption from sales and use tax for sales or consumption of medical marijuana” in the tax code.

Betty Yee, our local representative on the Board of Equalization, said in an interview with The Bay Citizen last month that many pot dispensaries didn’t pay the sales tax before 2007. Yee said the state is willing to work with dispensaries that can’t afford the past tax bills.

This article first appeared at baycitizen.org


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