MARIJUANA DISPENSERS WELCOME RULING THEY MUST PAY TAXES

They might be the only businesses in Colorado begging for their
products to be taxed.

But a number of medical-marijuana dispensaries say taxation is
critical for their industry's long-term health, and many say they've
been collecting sales taxes for months -- before a legal opinion
issued Monday saying their products are taxable.

After the opinion from Attorney General John Suthers,
medical-marijuana dispensaries could be facing penalties for not
collecting sales taxes that could include fines and, ultimately, seizure.

Mark Couch, a spokesman for the Colorado Department of Revenue, said
agency officials met Monday to discuss sending a letter to
dispensaries statewide to inform them about paying the state's 2.9
percent sales tax.

"We'll be actively contacting them to remind them of their legal
obligations," Couch said.

Dispensaries also must obtain state retail sales-tax licenses, which
cost $4 for one year. Starting in January, businesses can purchase
two-year licenses for $16.

Suthers' opinion said medical marijuana is subject to state sales tax
as are food products made with it. Marijuana seed, however, is
considered an agricultural product and exempt from sales tax.

For dispensary owners like Miles Zalkin, who operates Pain Management
of Colorado in Denver, the opinion just means business as usual.

"We've been collecting sales tax from Day One," said Zalkin, whose
business has been open just over a year. "We run our business as if
it was regulated."

Zalkin estimated he's collected tens of thousands of dollars in
Denver and state sales taxes.

"We are in favor of taxation," he said. "We are in favor of seeing
new regulation come in and clean this industry up."

Couch said that of some 60 dispensaries in Colorado that revenue
officials have identified -- and he said there may well be more --
about half are paying sales taxes.

He said the department has no way to track how much has been
collected in sales taxes from dispensaries, and the agency has no
estimates of how much revenue medical marijuana will generate.

California officials reported having collected about $11.4 million in
tax on some $142 million of medical-marijuana sales in 2005-06.

A number of cities and counties have taken the position that sales
taxes apply to medical marijuana. Boulder officials estimated the
city is reaping between $2,400 and $3,000 a month from medical-marijuana sales.

City officials in Denver said the city has no estimate on how much
sales-tax revenue the dispensaries will produce but is preparing to
instruct dispensaries on how to collect the sales tax and remit it to the city.

Denver's sales tax is 3.62 percent.

Ernie Travis, owner of Boulder Vital Herb, said he recognized early
that paying sales taxes was important "to make marijuana look
legitimate to the community."

Travis added, "There's a lot of positive things marijuana can do.
Taxes is just one of them."

Lawmakers likely will be asked in January to set up regulations on
the industry. For Rep. Steve King, a Grand Junction Republican and a
veteran police officer who used to present anti-drug programs in
schools, the irony is inescapable.

"It is absolutely weird," King said about the thought of regulating
the sale of marijuana, "but just because I may not like a law doesn't
mean I don't have an obligation to make it so it's functional."