Jim Finnel
Fallen Cannabis Warrior & Ex News Moderator
Sales of medical marijuana in California have always been taxable by the State Board of Equalization, which administers the state's income and sales tax. Now, however, the City Council of Los Angeles has added a ballot question to the upcoming March 8 special election which will ask voters to decide whether to add a 5 percent sales tax to all sales of medical marijuana.
The additional revenue that the taxation of medical marijuana would raise would fund general municipal services. According to the resolution, referred to as Measure M, these include, but are not limited to, "such matters as police protection and crime suppression services, fire prevention and suppression services, park and recreation facilities, and general improvements throughout the City."
Although Measure M will appear on the March 8 ballot, the Los Angeles City Attorney, Carmen A. Trutanich, formally informed the Los Angeles City Council members in a Nov. 3, 2010, report that "the City should not, and indeed legally cannot, allow and tax marijuana sales. Moreover, medical marijuana collectives in the City are required to operate on a not for profit basis."
Because these tax-exempt organization's sales are not subject to California sales tax, Trutanich went on to explain that because California state law prohibits Los Angeles "from imposing a business tax or fee based on income or gross receipts upon any entity that qualifies for tax-exempt status under state or federal law," the City of Los Angeles will not be able to collect any sales tax from these medical marijuana organizations.
Despite the common wisdom that the sale and use of medical marijuana is legal in the State of California, Trutanich, in his capacity as City Attorney, also reminded the City Council members that marijuana is still considered an illegal controlled substance under federal law. Federal law supersedes state laws, and "sales, cultivation, storage and similar activity relating to marijuana, in almost all circumstances, remain federal crimes and can be prosecuted by the United States Government despite the Compassionate Use Act."
Medical marijuana sales have been legal in California since the Compassionate Use Act was passed into law in 1996. Since then, sales of it have grown to more than $200 million per year throughout the state. Other California cities, including Oakland, San Jose, Long Beach, and Sacramento, have already passed similar sales tax laws to the one under consideration in Los Angeles.
These cities have gone ahead with sales taxes on medical marijuana sales because many medical marijuana organizations prefer to avoid the arduous government reporting required of tax exempt organizations by both federal and state organizations, remaining for profit organizations that pay local taxes, including sales tax on marijuana. Besides taking up considerable amounts of time, tax-exempt organizations, including their finances, exempt purpose and operations, are under a great deal of scrutiny by the federal government, which, as noted above, still considers sales of marijuana to be illegal.
NewsHawk: Jim Behr: 420 MAGAZINE
Source: news.yahoo.com
Author: Shayna Leah
Copyright: 2011 Yahoo! Inc.
Contact: Shayna Leah
Website: Los Angeles May Begin to Tax Medical Marijuana
The additional revenue that the taxation of medical marijuana would raise would fund general municipal services. According to the resolution, referred to as Measure M, these include, but are not limited to, "such matters as police protection and crime suppression services, fire prevention and suppression services, park and recreation facilities, and general improvements throughout the City."
Although Measure M will appear on the March 8 ballot, the Los Angeles City Attorney, Carmen A. Trutanich, formally informed the Los Angeles City Council members in a Nov. 3, 2010, report that "the City should not, and indeed legally cannot, allow and tax marijuana sales. Moreover, medical marijuana collectives in the City are required to operate on a not for profit basis."
Because these tax-exempt organization's sales are not subject to California sales tax, Trutanich went on to explain that because California state law prohibits Los Angeles "from imposing a business tax or fee based on income or gross receipts upon any entity that qualifies for tax-exempt status under state or federal law," the City of Los Angeles will not be able to collect any sales tax from these medical marijuana organizations.
Despite the common wisdom that the sale and use of medical marijuana is legal in the State of California, Trutanich, in his capacity as City Attorney, also reminded the City Council members that marijuana is still considered an illegal controlled substance under federal law. Federal law supersedes state laws, and "sales, cultivation, storage and similar activity relating to marijuana, in almost all circumstances, remain federal crimes and can be prosecuted by the United States Government despite the Compassionate Use Act."
Medical marijuana sales have been legal in California since the Compassionate Use Act was passed into law in 1996. Since then, sales of it have grown to more than $200 million per year throughout the state. Other California cities, including Oakland, San Jose, Long Beach, and Sacramento, have already passed similar sales tax laws to the one under consideration in Los Angeles.
These cities have gone ahead with sales taxes on medical marijuana sales because many medical marijuana organizations prefer to avoid the arduous government reporting required of tax exempt organizations by both federal and state organizations, remaining for profit organizations that pay local taxes, including sales tax on marijuana. Besides taking up considerable amounts of time, tax-exempt organizations, including their finances, exempt purpose and operations, are under a great deal of scrutiny by the federal government, which, as noted above, still considers sales of marijuana to be illegal.
NewsHawk: Jim Behr: 420 MAGAZINE
Source: news.yahoo.com
Author: Shayna Leah
Copyright: 2011 Yahoo! Inc.
Contact: Shayna Leah
Website: Los Angeles May Begin to Tax Medical Marijuana
