Jul 20 2009

Tax Prozac, not medical marijuana


There’s been much brouhaha lately about taxing marijuana.  California has already decided that medical marijuana will be taxed.  Currently the state requires dispensaries to pay sales tax to the state.  If they don’t then they are in violation of state law, and therefore fair game for the feds.

The state collects 7.25% for itself and at least 1% for the local district, for a base tax rate of 8.25%.  Most cities in California collect at least 9% in sales tax.

The state bean counter has determined that California will probably realize $1.4 billion a year from a $50 per ounce surcharge on marijuana as described in AB 390 proposed by Tom Ammiano of San Francisco.  Included in the $1.4 billion figure is an estimated 30% increase in sales upon legalization at the state level.  The bill specifically exempts medical marijuana patients from the tax.

Confusing the issue, first Oakland and now Los Angeles are considering taxing medical marijuana.  Oakland’s Measure F would set up a special category of “marijuana business” to be taxed at the rate of $18 per $1000.  This doesn’t sound like much and works out to about $4.50 per ounce.  The ballot argument points out that marijuana business in Oakland is currently taxed at $1.20 per $1000 as “general retail”.

According to the California State Board of Equalization, medical marijuana does not qualify for medical exemption from sales tax for a number of reasons.  Primarily because it is classified as Schedule I by the federal government.  Because it is Schedule I it cannot be “prescribed” and is legally defined as having no medical value.

The Total Statewide Base Sales Tax and Use Rate for California is 8.25%  The total sales tax in Oakland is 9.75%.  If Measure F passes in Oakland, medical marijuana patients there will be paying 9.7668% in sales tax for medicine.  Keep in mind, none of this revenue will be from “recreational users”, it will be from medical patients.  The word “medical” appears nowhere in Measure F.  The word “marijuana” is used with the obvious meaning “all marijuana”.  What this will mean when cannabis is reclassified to Schedule II and is therefore legally defined as medicine and exempt from tax is unclear.

In Los Angeles, three supervisors have announced an initiative for a special tax on “marijuana” similar to Oakland’s.

There are two different things going on here.  The statewide proposed surcharge specifically exempts “medical marijuana” while the city initiatives do not.

Medicine should not be taxed

Your typical medical marijuana patient needs about an ounce a month.  Actually, about an ounce and a quarter.  Some need 4 ounces or more.  Note that “recreational users” most definitely do not consume nearly as much as medical patients. So the sickest and most needy will be paying the most.

The city proposals are regressive, falling most heavily on the sick and disabled, who are also most likely to be subsisting on Social Security.  After paying rent, most Social Security dependents don’t have the price of an ounce left.

The difference in price among the top grades is mostly about appearance, taste, and smell.  Potency and medicinal efficacy don’t have much to do with it.  There’s nothing wrong with “recreational users” paying $85 an eighth for the very best and subsidizing the cost of providing medicinal strength cannabis for poor medical patients.  Most people think that’s the way things should work.  But there is something wrong with taking money the sick and dying spent for medicine and giving it to the government to balance the budget.

While the Oakland tax seems relatively insignificant, it will be the first of its kind in the nation.  Because it sets a precedent it will be very significant.  It is the camel’s nose under the tent.  It was through the Marijuana Tax Act of 1937 that marijuana was first made illegal.  Prior to that it was an important part of the American pharmacopeia.

While it may be well-intentioned, we all know what the road to Hell is paved with, and there is much to be said against being generous with other people’s money.  Particularly when you go around announcing to the press you gross $10 million a year.

Tax Prozac

In 2001, according to Hollywood today the ten largest pharmaceutical companies in the Fortune 500 had profits in excess of the other 490 companies, the majority of this profit being from the SSRIs and the SNRIs.

The average net return for these ten pharmaceutical companies was 18.5% of sales, 16.3% of assets, and 33.2% of shareholders’ equity.  The median net return for all other 490 industries in the Fortune 500 was only 3.3% of sales.

Prozac kills people, makes them crazy as a loon, is addictive, and it doesn’t work any better than a sugar pill.

Medicine should not be taxed.  Tax Prozac.

Yesterday the Associated Press published California sprouts marijuana ‘green rush’ which contained the following:

Justin Hartfield, a 25-year-old Web designer and business student, founded WeedMaps.com, where pot clubs and doctors who write medi-pot recommendations list their services and users post reviews. Hartfield says the site has brought in nearly $250,000 in its first year.

Hartfield exhibited at THC Expo, a two-day trade show at the Los Angeles Convention Center that attracted an estimated 35,000 attendees in June. There was hydroponic gardening equipment and bong vendors and bikini-clad models wearing leis made of fake marijuana leaves.

Like just about everyone else connected to the cannabis trade, Hartfield has a letter from a doctor that entitles him to buy medical marijuana from a dispensary. But he sees no point in pretending he is treating anything more than his taste for smoking weed.

“It is a joke. It’s a legal way for me to get what I used to get on the street,” he said.

Evidently this is the caliber of “activists” and “advocates” that support taxing medical marijuana.  If he had a clue he would know he self-incriminated himself of fraud and of several violations of the California Health & Safety Code, as well as forfeiting any protection Proposition 215 may have availed him, and possibly felony charges.

While prosecuting anyone for using marijuana is wrong, so is hiding behind the skirts of the sick and dying and profiting from the money they spend for medicine while jeering them and their cause.  At the very least, it has the appearance of exploitation.  For many cannabis is the difference between life and living death, or even death itself.  For them medical marijuana is no laughing matter.

California Health & Safety Code 11362.74 (2) specifies that providing false information is grounds for denial of a state ID card.  Section 11362.81 specifies that a person who “fraudulently represents a medical condition or fraudulently provides any material misinformation to a physician, county health department or the county’s designee, or state or local law enforcement agency or officer, for the purpose of falsely obtaining an identification card” shall be subject to 6 months in county jail and no more than $1000 fine.  It also specifies they may be prohibited from “attempting to obtain, or obtaining or using” an ID for six months.

For more info:
Medical marijuana and pizza – examiner.com | 19 Jul 09
Push to tax medical marijuana in California – ABC News | 16 Jul 09
Legal pot would bring $1.4B – The Associated Press | 16 Jul 09
Medical marijuana and psychiatric conditions – examiner.com | 6 Jul 09
Pushing Prescriptions – The Center for Public Integrity
Health Care Almanac – California Health Care Foundation
California Healthcare Spending Quick Reference Guide – California Health Care Foundation
Healthcare 101 – California Health Care Foundation | Apr 2009
Oakland Voter Handbook – Special Municipal Vote by Mail Election | 22 Jul 09
AB 390 Staff Legislative Bill Analysis – California State Board of Equalization | 23 Feb 09
Information on Sales Tax and Registration for Medical Marijuana Sellers – California BOE | Jun 2007
District Taxes, Rates, and Effective Dates – California State Board of Equalization (BOE)

Facebook Comments