Weed Wars

Dispatches from the California Marijuana Front

March 2, 2010
What's in a name? It's all taxable just the same

Thumbnail image for RB Humbolt 2.JPGThe semantics of medical marijuana transactions can sound so good-hearted, down right communal. Since state law doesn't allow for profit-making operations, many cities declare the word "sale" to be a four-letter word for dispensaries.

 But the state Board of Equalization says all pot store transactions are treated the same as taxable sales.

 And it doesn't matter to the BOE if the transactions are legally defined as "in-kind contributions" or "reimbursements" or "reasonable compensation" for expenses of cultivating and providing medical pot.

 "No matter what you call it, it is tangible personal property and therefore is taxable," said BOE spokeswoman Anita Gore.

The BOE publishes tax guidelines for legal marijuana sellers and a link for obtaining sales permits.

Gore said the state estimates that medical marijuana dispensaries currently generate $98 million in sales and $8 million in annual sales taxes in California. The figure, revised downward from an initial estimate of $200 million in sales and $18 million in state sales taxes, may seem paltry for California's manic marijuana market.

Last year, Betty Yee, the BOE's chairwoman, famously said an agency analysis suggests California could reap $1.3 billion a year - based on a $50 per once retail tax - if marijuana is legalized for adults 21 and over.

There may be plenty more to collect from the current, thriving medicinal circuit.

Pictured: Pot offerings priced at a dispensary in Redding. Randall Benton/rbenton@sacbee.com

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