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Thursday, March 21, 2013

California Has No Clue How Much Money It's Making From Marijuana Sales

Posted By on Thu, Mar 21, 2013 at 12:33 PM

Your guess is as good as ours
  • Your guess is as good as ours
Most government agencies in California prefer to pretend that the state's medical cannabis industry doesn't exist. The state Board of Equalization is an exception -- and with good reason.

State sales taxes are due on every medical marijuana transaction, and the BOE has spent time over the past few years making sure that every dispensary with a seller's permit is well-aware -- often charging back taxes and fees. The BOE also showed a kind side last week when it proposed that sales taxes be relieved on cannabis users in hospice care (who will still be charged $50 an eighth for their preferred medicine).

Which begs the question: How much tax money does the state raked in from medical marijuana sales?

We decided to ask state officials, who informed us that California has no idea.

The BOE did make waves in 2010 when a California NORML analysis concluded that the state makes between $700 million and $1.3 billion in medical marijuana sales annually, which means it collects about $100 million in taxes each year. Sounds good, right?

But the problem is that's a 2009 estimate, a BOE spokeswoman told us this week. Not only that, it's a 2009 estimate based on 2007 sales figures.

Statewide minimum sales taxes have continued to increase since, from 7.25 percent to 7.5 percent (not including slightly higher figures in cities and counties, such as our own San Francisco).

There are also more taxpaying dispensaries. True, several hundred across the state have closed after the feds started their crackdown on pot clubs in 2011, but restrictions -- such as cities requiring dispensaries to have a BOE seller's permit to do business -- have also become tighter.

Cities like San Jose, which had no dispensaries in 2007, now has close to 100. And the state's biggest dispensary -- Harborside Health Center, which is waging a war against the feds to stay open -- was not yet open in 2007. Lastly, places where the feds went nuts and closed every dispensary they could find, like in San Diego, are now considering adding these businesses back. (Conversely, L.A. might vote to close many dispensaries).

It's nearly certain that sales and taxes both have increased in five years, with the industry growing since President Barack Obama took office, even accounting for the cutback in the crackdown. But what's less certain is how many dispensaries are issued BOE licenses.

It turns out that several different "merchant codes" (think business classifications, like "restaurant" or "supermarket") are issued to dispensaries. And not every business within a given code is necessarily a dispensary, a BOE spokeswoman speaking on background said.

So that means that nobody -- not the government, not activists, and maybe not even the feds -- know how many dispensaries exist in California. Likewise, while the state is collecting their taxes, the BOE doesn't know offhand how much taxes they're collecting.

Might be a good fact to collect along with the ducats.

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About The Author

Chris Roberts

Chris Roberts has spent most of his adult life working in San Francisco news media, which is to say he's still a teenager in Middle American years. He has covered marijuana, drug policy, and politics for SF Weekly since 2009.


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