And the Money Grab Continues …

Every state that has legalized marijuana in any form (medical or recreational) see it purely as a new and solid revenue stream to help boost the coffers and make up for other losses. We understand that. It was kind of a given. BUT exactly how many different hands should we be expected to have in our pockets and exactly how deep should they be allowed to go? This question is coming up now in Santa Cruz County, CA where they are considering a tax that would charge dispensary owners 7% above and beyond all the other taxes being paid.

Local operators are crying foul, saying the proposed 7 percent rate is too high and would increase prices for patients.

“It’s a pretty significant disadvantage for these folks,” said attorney Ben Rice, who works with several pot clubs. “They’re all fine with paying money to make this work for everybody, but they also don’t want to be put out of business.”

Some form of taxation was anticipated as a way to pay for enforcement of a suite of new medical marijuana regulations that went into effect earlier this year. The proposal the county Board of Supervisors is likely to put before voters would allow an adjustable tax of up to 10 percent on the gross receipts of the dozen or so dispensaries operating in unincorporated areas of the county.

Chief Administrative Officer Susan Mauriello said those enforcement costs costs add up.

Khalil Moutawakkil, owner of the KindPeoples Collective, pointed out dispensaries pay sales taxes, payroll taxes and corporation taxes. Through storefront rents, they also pay local property taxes. And operators not only aren’t rich, he said, but they cannot take standard federal tax deductions available to other businesses.

“No dispensary director that I know of is wealthy,” Moutawakkil said.

If the county is going to tax dispensaries, operators want to be treated as equals to other businesses — they want permits. The new county rules grant limited immunity, but don’t recognize dispensaries as legitimate operations on par with flower shops or convenience stores. They are also asking for the right to grow pot on site, minimizing the need to buy from growers.

Another point of contention is growers aren’t being taxed, which could be trickier from a legal standpoint. Some counties have tried it, but it also represents a second layer of taxes that could drive up pot prices further. (read more here)

They want to have their cake (by taxing dispensaries to death) and eat it to (by not taking the steps to indemnify them as much as possible with county issued permits). I know times are tough and I understand that budgets need to be balanced, but one industry alone cannot do everything … and these municipalities should know better than to put all their eggs in one basket.