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Medical Marijuana Dispensary Tax Legislation Introduced in California

Wednesday, February 13, 2008

A recently introduced bill would protect California’s medical marijuana dispensaries from overwhelming tax burdens that have resulted from a previously gray area in the law.

Senate Bill 1098, introduced by California State Senator Carole Migden (D – San Francisco), would relieve medical marijuana dispensaries of tax liability, interest, and penalties for sales made prior to October 1, 2005.

The state Board of Equalization, responsible for administering taxes in the state, ruled in 2005 that medical marijuana is subject to general sales tax. Before that ruling there was no clear direction from the state on the subject.

Curtis Notsinneh of DPA’s California Capital office said, “It’s not fair to hold dispensaries responsible for sales tax dating back before the Board of Equalization ruling. That tax liability would be financially crushing.”

SB 1098 is an improved version of a bill from last year, SB 529, and would put into law a ruling by a California Appellate Court. In the process of protecting dispensaries from tax liability for sales prior to October 1, 2005, the bill would normalize medical marijuana business practices with regard to tax policy.

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