Meds or sin, taxes dig deep

Cannabis has many names, but people who rely on it to ease pain and alleviate ailments deploy an evocative label. They call it medicine.

In California, elected officials and regulators are using another, less prosaic word: revenue.

The gap between medicine and revenue represents a philosophical disagreement over an agricultural commodity that’s never been easy to define. Your medicine becomes my moneymaker.

Now State Senator Mike McGuire (D-Healdsburg) wants to formalize the state’s sinful definition of medical marijuana – he wants to tax it like those other habitually troublesome adult products, booze, beer, wine and tobacco. 

Assembly Bill 987, introduced in February, would impose a 15 percent tax on marijuana retail products, whether farm-based or manufactured. The proposed legislation inspired angry discussions on social media. Many cannabis patients pointed out that prescription medicine is not taxed in California. 

McGuire is no enemy of cannabis – he was a key player in the landmark 2015 legislation that brought regulatory framework to the California marijuana industry for the first time in two decades.

And McGuire’s interest in taxing cannabis is nothing new – local communities have been collecting lucrative sales taxes from dispensaries for years.

But the underlying argument about AB 987 – the argument about definitions – shows once again how the cannabis community and regulators approach the product from very different perspectives.

The claim that authorities shouldn’t tax marijuana because it’s medicine falls short of persuasive. Medical cannabis requires a physician’s recommendation in California, but that’s not the same as a prescription.

Federal authorities regulate prescription meds. And the feds still regard cannabis as a U.S. Controlled Substances Act Schedule I drug, which means doctors can’t write script for it. Moreover, the medical community is wary of cannabis, thanks to the absence of research, which is based on the Schedule I status. It’s a vicious cycle.

With McGuire’s bill, California could make clear its intent to regulate cannabis like something wholly non-medicinal – spirits, beer, wine and tobacco.

New state cannabis regulations are being organized along a strategy designed in the 1930s, after Prohibition. Permits and licenses will be limited to prevent vertical integration, where single entities control the entire supply train, from farm to retail. 

A tiered system of cultivators, manufacturers, testers, wholesalers, transporters and retailers is being established. The goal is to allow for craft and artisanal growers to compete alongside the inevitable big players – a competitive marketplace.

The tiered system allows for tracking and tracing – and taxing. 

McGuire’s legislation will spread tax revenue across a wide spectrum. State regulators will get a big chunk to help support their work. They will share money with local law enforcement agencies. Services to help with addiction and recovery will receive money, as will parks and natural resources that have suffered from illegal grows run by criminal cartels. The state’s general fund will benefit, too.

All of which acknowledges a modern reality. Medicinal or not, there’s big money in making people feel better.


Comments

Top Stories

Monday, July 13, 2020 - 07:07

The California Department of Tax and Fee Administration (CDTFA) has served tax warrants on a dozen illicit cannabis businesses operating illegally in Southern California.