Tax relief proposed for pot clubs

Medical marijuana sellers across the state would have millions of dollars in unpaid back taxes pardoned in an effort to spare them from bankruptcy and encourage them to pay sales tax under a bill introduced by a San Francisco lawmaker.

Although federal rules state that using marijuana is a crime, medical marijuana can be legally sold in California under a state law approved by voters in 1996. It wasn’t until 2005, however, that the California Board of Equalization ruled that medical marijuana dispensaries must pay sales tax.

As a result, many dispensaries that opened before 2005 have “massive” back-tax burdens that could force them out of business, according to Bruce Mirken, a San Francisco-based spokesman for the nonprofit Marijuana Policy Project.

“A lot of these dispensaries really do want to be responsible citizens and pay taxes as appropriate, but many of them weren’t sure what to do for a long time,” Mirken said.

A bill introduced recently by state Sen. Carole Migden, D-San Francisco, would forgive sales tax debts accrued prior to October 2005 if the marijuana traders register before April 2009 to pay sales tax.

Board of Equalization Vice-Chair Betty Yee said it would be “appropriate” to provide amnesty to the dispensaries because they didn’t charge sales tax to their customers before 2005.

Yee said although there’s no estimate for the amount of money that is owed by the dispensaries, it would be in the “millions of dollars.”

Providing back-tax amnesty to dispensaries that register to pay sales tax could help the state and its municipalities raise an estimated $25 million to $30 million a year in new sales tax receipts, according to Yee.

Forgiving dispensaries’ back taxes would encourage them to register to pay sales tax, according to San Francisco-based lawyer Matt Kumin, who represents dispensaries.

A total of 31 dispensaries in San Francisco have obtained city permits or applied for permits to operate legally in San Francisco, according to Planning Department official Tara Sullivan, who added that “many more” could be operating without permits.

Kevin Reed, who operates a cannabis delivery service in San Francisco, said new patients are given a brochure that explains that marijuana prices include sales tax, but “it’s an area nobody really wants to talk about,” so “we never mention it again.”

jupton@examiner.com

Bay Area NewsLocal

If you find our journalism valuable and relevant, please consider joining our Examiner membership program.
Find out more at www.sfexaminer.com/join/

Just Posted

New plan provides a road map to better transit for Bayview residents

SFMTA to review suite of 101 projects designed to improve community safety and access

Video shows angry 49ers fan throwing items at cashier on Super Bowl Sunday

San Francisco police are asking the public for help identifying an aggressive… Continue reading

Mandelman bringing bathhouses back to The City

New ordinance would amend health code restrictions imposed in 1980s

Trump issues pardon to Eddie DeBartolo Jr.

President Donald Trump on Tuesday granted Eddie DeBartolo Jr., the long-time owner… Continue reading

Bernie Sanders draws large crowd at Richmond rally

Democratic presidential candidate U.S. Sen. Bernie Sanders drew a large crowd at… Continue reading

Most Read