MEDICAL MARIJUANA SALES TAX MAY END

Medical marijuana dispensaries in California, including the two that
currently operate in Mendocino County, may soon be exempt from state
sales tax, said a representative from the California State Board of
Equalization.

The regulations will soon reflect the change that when marijuana is
prescribed by a physician it is determined to be a medicine, said
Sarah, the representative, who refused to reveal her surname.

In order to be exempt from sales tax, the business must conform to
Regulation 1591, which states in part that the item must qualify as a
medicine, said the representative.

"Regulation 1591 defines a medicine, in part, as any substance or
preparation intended for use by external or internal application to
the human body in the diagnosis, cure, mitigation, treatment, or
prevention of disease and which is commonly recognized as a substance
or preparation intended for that use," stated a special notice
released by the board titled "Information on Sales Tax and
Registration for Medical Marijuana Sellers."

The change will be a reversal from the board's previous position.

In February 2007, the board sent out a notice to dispensaries, urging
them to obtain a seller's permit like any other retailer.

There are currently two dispensaries operating in the county: Herban
Legend in Fort Bragg and Reflections of Avalon in Ukiah, which opened
last month on South State Street just outside of city limits.

A third dispensary, Mendo Remedies in Laytonville, was open until
last month, when it closed its doors for good.

Paula Deeter is the owner of Herban Legend in Fort Bragg. Deeter said
she has always adhered to federal tax laws.

"I wish they would make up their minds," she said. "We were unclear
at first if it was a taxable item. We've always paid federal income tax."

On April 20, 1996, the U.S. Food and Drug Administration drafted a
news release that declared that smoked marijuana had no medicinal value.

"A growing number of states have passed voter referenda (or
legislative actions) making smoked marijuana available for a variety
of medical conditions upon a doctor's recommendation," the memo
stated. "These measures are inconsistent with efforts to ensure that
medications undergo the rigorous scientific scrutiny of the FDA
approval process."