Spokane7
61°
December 14, 2010 in Region
Washington trying to collect pot sales tax
SEATTLE — The Washington Department of Revenue has launched a statewide effort to collect sales tax from medical marijuana dispensaries — even as some prosecutors and the Health Department maintain such dispensaries are illegal.
Spokesman Mike Gowrylow said today that the Revenue Department mailed letters to 90 dispensaries and related organizations on Friday, insisting that medical marijuana is not exempt from state sales tax and that dispensaries must collect that money and turn it over to the state.
The letter said dispensaries must also pay the state business and occupation tax.
“We were contacted by a medical marijuana dispensary who was collecting sales tax and said many competitors weren’t,” Gowrylow said. “We went on the Web and tried to come up with all the names and addresses of medical marijuana dispensaries to inform them they’re required to charge sales tax.”
Voters approved medical marijuana in Washington in 1998, but the law does not allow for marijuana sales. Instead, patients must grow marijuana themselves or designate a caregiver to grow it for them.
Because growing marijuana can be expensive and difficult, some patients have formed collectives to grow pot together, contributing dues to help cover costs. In the Seattle area, some of the collectives have dispensaries that serve thousands of members.
The law is silent on such collectives, and prosecutors around the state have taken differing views on whether they’re permissible. The state Health Department maintains they’re not.
The Revenue Department’s letter said medical marijuana isn’t exempt from the sales tax — as prescription medications are — because it can’t be prescribed under state and federal law. Washington’s law instead requires an “authorization” from a medical professional.
“We’re not involved in determining whether selling medical marijuana is illegal or not,” Gowrylow said. “Our job is to administer state tax codes. If you’re selling medical marijuana, it’s a retail sale.”
The news, first reported by The Associated Press, upset medical marijuana activists.
“My first reaction was, did they legalize it?” said Laura Healy, who helps run the Green Hope Patient Network in Shoreline. “How do you tax something that we’re technically not allowed to sell? You can’t have it both ways.”
Dale Rogers, director of The Compassion Program, a nonprofit patient collective in Seattle, said taxing medical marijuana would have a disproportionate effect on low-income people, including AIDS and multiple sclerosis patients already burdened by health care costs.
Seattle medical marijuana attorney Douglas Hiatt noted that authorities in some counties continue to raid dispensaries and prosecute their operators, while those in some other counties — including King County, the state’s largest — have allowed them to stay in business.
Requiring dispensaries to register with the state and pay sales tax could expose those involved to criminal prosecution, in violation of their Fifth Amendment right to avoid self-incrimination, Hiatt said.
Hiatt also argued medical marijuana authorizations are functionally equivalent to a prescription and should thus be exempt from the tax.
Washington isn’t the only state to address the issue of marijuana taxation. Mike Meno, spokesman for the Marijuana Policy Project in Washington, D.C., said Colorado and some California cities currently tax medical marijuana sold from dispensaries. Maine and Washington, D.C., plan to collect such taxes once their dispensary laws are up and running.
© Copyright 2010 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Children permitted at Washington prison powwows 
hawken on December 14 at 4:46 p.m.
Whoa!
Wasn’t this whole idea of legalizing pot heads, the argument that it would increase tax revenues to the state?
Now, you tell us that the local dealers are not paying their taxes?
Looks like they fooled you and you fooled us.
Let’s try heroin dealers. Maybe they are more honest in paying their taxes.
JBlim on December 14 at 4:49 p.m.
Taxing medicine? That’s pretty low down. Now comes hawken complaining that taxes are too low. Make up your mind, hawken.
JBlim on December 14 at 4:50 p.m.
And by the way, my back hurts . . .
andjusticeforall on December 14 at 4:53 p.m.
My question, is why not just legalize like alcohol(with stipulations)…then tax the f outta it, not only would it no longer be illegal to smoke a plant that grows with sun & water, it the tax monies generated could be used for great things….keeping school programs like music, fixing horrible roads…etc…people need to wake up
west on December 14 at 5:04 p.m.
Boy..this is going to balance the buget!! Whooo hooooo…..what will Olympia think of next..kids lemonade sales…
misjustice on December 14 at 5:07 p.m.
Fully legalize it, tax it if sold from a “store front”, and only prosecute those which don’t pay their taxes. But without full legalization, I fail to see how the state can tax an illegal act.
Keep it lit!
; )
maria on December 14 at 5:09 p.m.
This article has already been submitted and was not listed.
maria on December 14 at 5:10 p.m.
Oh, Hai!
PhiltheBibliophil on December 14 at 5:35 p.m.
If we sold it legally as the law allowed, and then taxed it not only would it provde much needed revenue, but it might stop some of the illegal traffic through Spokane, Tri-Cites, Yakima and Wenatchee! But that would make to much sense and to many “legal” businessmen hanging by a thread in their legal business’ would have to go out of business!
polistra on December 14 at 5:36 p.m.
There’s nothing unusual about taxing an illegal product. For many years after the end of national Prohibition, Mississippi was hypocritically Dry, and levied an official “Tax on Illegal Products” to make money from the alcohol sold at semi-legal stores.
The good old Bootleggers & Baptists alliance, which is now being replicated with a different substance.
Alfredo on December 14 at 5:44 p.m.
If the state demands a tax, seeing these as legitimate businesses, does it not officially make these businesses legal? Otherwise I’d call it a shakedown but without the protection.
eagleproducer on December 14 at 6:21 p.m.
I don’t want the government involved in weed at all. The black market is doing just fine. Marijuana has stayed at basically the same price for thirty years while increasing in potency at least ten fold. Name one other product that can make the same claim other than computing speed?
This is an issue of consenting adult freedom. Not a new cash cow for the state. That should be the appropriate conservative position, not the paternalism hawken advocates.
eagleproducer on December 14 at 6:23 p.m.
You’ve always been able to buy tax stamps for weed. The state has never been desperate enough to pursue this source of “revenue.”
http://norml.org/index.cfm?Group_ID=6670
PhiltheBibliophil on December 14 at 6:57 p.m.
Re-elect Bill Clinton!
Dazzeetrader11 on December 14 at 7:22 p.m.
If a full on tax would fix Gregoire’s overspending, she do it…to get votes . She’ll need em.
But, thse dispensary law is becoming so restrictive in WA, many will be asking…what’s the point. Read the law sometime. It prohibits proifit making on pot sales…sorta took the “good will” out of the business. Those pot sellers wanted the money…..this business will and should wither. The authorites are already going out and raiding those operations unannounced. Who can tax an operation that makes no money??? Gregoire’s an idiot.
It’ll die off. With no profit , who can pay the lawyers to defend these guys who grow? Ahhh yes…capitalism at work…
lewis8457 on December 14 at 9:36 p.m.
the state wants to tax them while the cops will bust a them at a drop of a hat just because they can. The war on drugs gives government lots of money for more and more guards, police…etc. plus they get to build more prisons, have more judges…etc.
If they legalized weed tomorrow more then half of the jails and prisons would be empty and many of our government union members would be….uh unemployed. The police they would have time to investigate property crimes again….I know i know i am over reaching on that one.
I have been waiting 35 years for it to become legalized and until our state gets so broke like California where they have to see what they spend versus what they could make in taxes sinks in.
Dazzeetrader11 on December 14 at 10:11 p.m.
Lewis, I recall from some old law school things that even if the crime is legalized, It’s still a crime. The offender might get pardoned but they still have to serve the sentence for what was a crime when the law was broken.
drywitt99 on December 14 at 11:18 p.m.
“My first reaction was, did they legalize it?” said Laura Healy, who helps run the Green Hope Patient Network in Shoreline. “How do you tax something that we’re technically not allowed to sell? You can’t have it both ways.”
Really???
I seem to recall Al Capone doing some heavy prison time for not paying tax on his ILLEGAL earnings.
Pay the damn tax…..and stop whining like teabagging Republicans!
greenlibertarian on December 14 at 11:20 p.m.
Compliance with this will be very problematic, and will tend to drive sales back into the black market, as opposed to the medical marijuana dispensaries.
My contacts in the medical marijuana distribution business tell me prices are dropping as more and more people get into the cultivation “business”. I believe the law allows for a MM patient (or designee) to grow up to 15 plants, which in this day and age, is a huge amount of product. and also to posess a 90 day supply which is defined as 24 ounces, again, a huge amount.
JBlim on December 15 at 7:00 a.m.
” … I believe the law allows for a MM patient (or designee) to grow up to 15 plants, . . ”
Yes, but that requires planning ahead. It also won’t help tourists who come to WA to get high.
JBlim on December 15 at 7:01 a.m.
If it were legal, that is . .