California due sales tax on medical marijuana, state board says

Reporting from Sacramento — California’s tax collectors still want their share of the burgeoning medical marijuana business.

The state Board of Equalization reaffirmed its position that medical marijuana dispensaries are not exempt from paying sales tax.

The decision, released Thursday, endorsed current policy that the selling of medical marijuana involves taxable tangible property, the board said.

The issue arose in a case involving the Berkeley Patients Group Inc. The Bay Area dispensary maintained that marijuana should have the same exemption from sales tax as other medicines prescribed by doctors.

Audits conducted for the period of July 1, 2004, through June 30, 2007, found that Berkeley Patients Group owed the state more than $6.4 million in taxes and interest.

The board’s decision this week underscores the need to regulate and tax marijuana distribution and sales, board Chairman Jerome Horton said.

“The time is overdue for the state to provide leadership for this industry regarding the manufacturing and sale of marijuana similar to what we did for cigarettes and liquor,” Horton said.

“Such proposed controls will have the same effect of regulating and controlling sales and capturing appropriate sales tax,” he said.

Horton said he was proposing legislation that would put the board in charge of administering a statewide licensing program for marijuana growers, importers, wholesalers and retailers.

California tax authorities estimate that the state currently collects $58 million to $105 million in sales taxes on $700 million to $1.3 billion in annual retail sales of medical marijuana, said Anita Gore, a board spokeswoman.

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