HIGH TAXES

The Berkeley Patients Group should pay its back taxes, but the state
should consider changing its policy for the future.

The fact that the Berkeley Patients Group owes approximately $6
million in back taxes and interest is merely an issue of failing to
properly adhere to contemporary state requirements.

The collective has stated that they did not collect taxes because
they consider medical marijuana to be a type of medicine, and
prescription medication is not taxed. They contend that they were
only liable to pay taxes starting in 2007, when the state
specifically stated that all marijuana dispensaries must take out
seller's permits and report their proceeds.

We disagree with the dispensary and believe that they should be
liable for the taxes. Medical marijuana has always occupied a
separate category from medicine dispensed by pharmacies, and it makes
sense for it to have always occupied a separate tax category. If the
dispensary were honestly unsure of whether they were responsible for
paying taxes, they could have clarified that with the California
State Board of Equilization.

Instead, they rolled the dice - and most likely lost. The board has
already ruled that the collective's stated reason was not a valid
argument for not paying taxes, when the board decided in Sept. 2010
that the Patients Care Collective owed over $600,000 in back taxes
from as long ago as 2005.

Unfortunately for the dispensary and others like it, the consequences
for unpaid taxes are steep - especially for the patients who rely on
the dispensaries. Huge tax liabilities put the dispensaries at risk
of closure, and without them, patients with legitimate prescriptions
are unable to purchase their medical marijuana.

For the future, the state should consider exempting
physician-prescribed medical marijuana from the collection of taxes.
By not doing so, the state is placing the tax burden on patients. But
until they do, dispensaries must obey the law - or else face high costs.