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State to collect sales tax on medical marijuana

February 24, 2011 |  1:17 pm

California's tax collectors want their share of the burgeoning medical marijuana business.

The state Board of Equalization announced Thursday that medical marijuana dispensaries are not exempt from paying sales tax.

The decision reaffirms current policy that the selling of medical marijuana involves taxable tangible property, the board said.

Marijuana The decision, reached in a vote Wednesday, involved the Berkeley Patients Group Inc., a Northern California dispensary, which maintained that marijuana should have the same exemption from sales tax as other medicines prescribed by doctors. Audits conducted for the period of July 1, 2004, through June 30, 2007, found that the Berkeley Patients Group owed the state in excess of $6.4 million in taxes and interest.

The decision underscores the need to regulate and tax marijuana distribution and sales, said board Chairman Jerome Horton, who represents Los Angeles County.

"The time is overdue for the state to provide leadership for this industry regarding the manufacturing and sale of marijuana similar to what we did for cigarettes and liquor," Horton said. "Such proposed controls will have the same effect of regulating and controlling sales and capturing appropriate sales tax."

Horton said he was proposing legislation that would put the board in charge of administering a statewide licensing program for marijuana growers, importers, wholesalers and retailers.

California tax authorities estimate that the state currently collects $58 million to $105 million in sales taxes on $700 to $1.3 billion in annual retail sales of medical marijuana, said Anita Gore, a board spokeswoman.

-- Marc Lifsher

Photo credit: Los Angeles Times

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