CALIFORNIA IN BID TO IMPOSE 7.25% SALES TAX ON CANNABIS

FOR decades, smoking marijuana has been an illicit affair, a key
anti-establishment ritual for America's counter-culture underground.

But the legalisation of the drug for medicinal purposes in California
has presented its advocates with a dilemma: to remain firmly on the
wrong side of the law or accept a demand to pay taxes on its sale.

Marijuana prescribed by a doctor for health reasons was
decriminalised in a state-wide referendum in 1996 and has grown into
a billion-dollar industry.

About 25,000 patients and carers are now members of the so-called pot clubs.

Chris Moscone, an attorney who represents the Hemp Centre, a San
Francisco dispensary, said: "There are basically two camps: those
that want to be treated like legitimate businesses, and the other
side, who are still rebels and don't want to be taxed."

The situation is further clouded by differences between federal and
state law. California's 150 to 200 owners of medicinal marijuana
dispensaries have operated legally under state law since 1996 - but
illegally under federal law.

And while a demand from state authorities to pay tax is seen by some
as further legitimising their business in terms of the state laws,
many dispensary owners fear the tax is self-incriminating and will
result in punitive measures from the federal government.

The dispensaries have received a state notice urging them to obtain a
sales permit for tax reasons. Every purchase of marijuana, which can
be bought with a doctor's prescription, would be subject to
California's 7.25 per cent sales tax.

But there appears to be substantial resistance among dispensaries to
the idea - only 27 dispensary owners currently have a sales permit.

But financial considerations rather than counter-culture affectation
may be the reason. Kris Hermes, of Americans for Safe Access, a
medical marijuana advocacy group, said more dealers would probably
agree to pay the tax if the bill did not include a provision for back
taxes on sales over the past eight years.

THE federal Marijuana Tax Act of 1937, introduced by Harry Anslinger,
an anti-cannabis campaigner and commissioner of the Federal Bureau of
Narcotics, stipulated anyone dealing in the substance had to pay one
dollar for each trade, or be fined up to $2,000. This effectively
criminalised dealers and led to a nationwide crackdown.

In 1970, federal authorities recognised cannabis as a Schedule 1
narcotic under the Controlled Substances Act.

Last year, the Supreme Court upheld federal authority to prosecute
the possession and use of marijuana for medical purposes.

The state of California, however, decriminalised marijuana in 1976
and the 1996 Compassionate Use Act established its use for conditions
including cancer, MS and AIDS.