SACRAMENTO April 9, 2016 – California legislative committees are considering two different bills by North Coast legislators to tax commercial medical marijuana.
• SB 987 by Sen. McGuire (Healdsburg) would impose a 15% excise tax on retail purchases of medical marijuana, above and beyond the current 7.5+% sales tax plus various local business taxes assessed by some localities.
• AB 2243 by Asm. Wood (Headsburg) would impose a cultivation tax of $9.25 per ounce on medical marijuana flowers, $2.75 per ounce on leaves, and $1.25 on each immature plant sold to licensed distributors in the state.
Cal NORML opposes both bills as excessive and premature, given that the costs would fall exclusively on medical consumers, and Californians are expected to vote on a broader legalize-and-tax initiative this November, the Adult Use of Marijuana Act (AUMA).
Both tax bills are modeled on similar taxes in AUMA (except AUMA lacks the $1.25 tax on immature plants in AB 2243). Unlike AUMA, though, which would tax all marijuana, SB 987 and AB 2243 apply only to medical marijuana. If AUMA passes, both bills will be redundant and moot. If not, they will almost certainly encourage marijuana producers to divert their supplies to the illegal, untaxed adult use market.
At legislative hearings, Cal NORML attacked both bills as excessive and premature: “At this time when providers already face burdensome new costs under the Medical Marijuana Regulation and Safety Act (MMRSA), it is unwise and inappropriate to impose any new state tax on medical marijuana,” testified Cal NORML director Dale Gieringer. Many patient advocates regard any taxes on medicine as unjust in principle.
Proceeds of the bills would go to local law enforcement activities, state regulation and environmental enforcement related to cultivation, and other programs. In a statement, Sen. McGuire said that the taxes are needed to compensate “communities that have long been paying the price of the negative effects of cultivation brought on by the ‘bad actors’ who destroy the environment and bring in crime.”
Cal NORML believes it is perverse to charge all of the costs of illegal growing to legal medical marijuana providers who are struggling their best to comply with state law.
AB 2243 will be voted on by the Assembly Revenue and Taxation Committee April 18th. At a hearing last week, Asm. Bill Quirk (D-Hayward) decalared his opposition to the bill, saying that the legislature should wait until after November. Committee chair Sebastian Ridley-Thomas (D-LA) indicated similar concerns.
The Senate Government and FInance Committee held hearings on SB 987 last week. Sen. Jim Beall (D-San Jose) voiced serious concern about taxing marijuana for medical purposes in view of the many patients with serious medical need and limited financial means. Sen. McGuire agreed that this was a serious issue, and that he was trying to hammer out an amendment to address medically needy users. Committee Democrats agreed to pass the bill as a “courtesy vote” to the author, on the condition that it be re-submitted with amendments for review by the committee later.
In the meantime, SB 987 will be heard by the Senate Appropriations Committee on April 18th. It’s unlikely that committee will kill the bill since it would raise revenue for the state, but there remains a good chance of killing it on second review by the Government and Finance committee.
Fortunately, both bills face an uphill battle, since a 2/3 vote is required to approve any tax, and the Republican minority has declared its opposition to any new taxes.
WHO TO CONTACT:
Assembly Revenue and Taxation Committee (Chair: Sebastian Ridley-Thomas, West LA – Beverly Hills)