Arizona AG wants to tax medical pot

by Mary K. Reinhart - Jan. 27, 2011 08:20 AM

The Arizona Republic

Arizona Attorney General Tom Horne and state tax collectors agree that medical marijuana should be taxed like any other retail product, and potential dispensary owners say they expected a levy.

But a bipartisan bill to tax pot at 300 percent is far more than the dispensary crowd had expected.

The bill's sponsor, Rep. Steve Farley, D-Tucson, said he believes pot should be taxed at roughly the same rate as cigarettes. Farley also acknowledged that the tax rate, if House Bill 2557 passes, could act as a deterrent or at least reduce the amount that people use.

"We all know that not all this will necessarily go to sick people," Farley said. "The cost, even with the tax, will be less than pharmaceutical drugs." [That is a big LIE! Drugs purchased on the black market almost always cost many times drugs which are purchased on the legal market. The price of medical marijuana in California is often more expensive than illegal marijuana purchased on the California black market. A bag of medical marijuana will go from a cost of $50 per ounce to $200 an ounce after the tax is added]

Andrew Myers, executive director of the Arizona Medical Marijuana Association, said such a tax would deal a fatal blow to the fledgling industry and put marijuana out of reach for people who truly need it.

"We're talking about seriously and terminally ill patients," Myers said. "A 300 percent tax would tax everybody out of the market."

Myers, whose group spearheaded the initiative drive, said he supports a standard sales tax levy. It's a recognition by the state, he said, that dispensaries are legitimate businesses that can help stoke the economy.

Horne said Wednesday that medical marijuana falls outside the state sales tax exemption for prescription drugs and should be taxed.

Medical marijuana, under the law approved by voters in November, would be sold to patients with "certification" from their doctors.

"It's not a prescription. It's a written certification," said Anthony Forschino, assistant director of the state Department of Revenue. "It would just be a retail sale. Like buying something off the shelf or over the counter."

The state sales tax is 6.6 percent, with a portion of the revenues going to cities and towns, and 0.6 percent dedicated to K-12 education under a previous ballot measure. Cities also can levy their own tax on dispensary sales.

Proposition 203 allows licensed physicians to recommend medical marijuana to patients with debilitating medical conditions, including cancer, glaucoma, HIV/AIDS and Alzheimer's disease.

Patients would register for identification cards with the state Department of Health Services and could receive up to 2½ ounces of marijuana every two weeks.

State health officials expect to grant dispensary licenses by late spring or early summer, following a series of public hearings. Marijuana dispensary owners would have to apply for a sales tax license.

Horne, who opposed Prop 203, said he believes a medical marijuana sales tax could bring in $40 million a year. He said his estimate was based on Colorado's experience.

Colorado has an estimated 100,000 medical marijuana users. It imposes a statewide sales tax, which brought in $2.2 million last year, according to news reports. Denver and Colorado Springs also have collected several hundred thousand dollars in city taxes.

Arizona health director Will Humble has said he anticipates fewer than 20,000 people will get permission to use medical marijuana under the draft rules established by his office.

Source

Medical marijuana sales taxable, Horne says

Howard Fischer Capitol Media Services Arizona Daily Star | Posted: Thursday, January 27, 2011 12:00 am

PHOENIX - Arizonans who get a doctor's recommendation to buy medical marijuana are going to have to shell out a little extra money for the state - and maybe a whole lot more.

Attorney General Tom Horne said Wednesday that the marijuana sold at state-regulated dispensaries being set up under Proposition 203 is subject to the state and local sales taxes.

Horne figures the levy could generate $40 million for the state, based on a Denver Post story on how much marijuana is sold through dispensaries in that community "and applying that pro-rata to the Arizona population."

With that in mind, Rep. Steve Farley, D-Tucson, wants to go further. Much further. With some Republican support, he is proposing a 300 percent tax on marijuana sold at dispensaries.

Farley had no estimate on how much his proposal would bring in. But using Horne's $40 million as a starting point, a 300 percent levy could produce $1.8 billion a year - far more than enough to erase the state's projected $1.1 billion deficit for next year.

Horne acknowledged that the law, approved by voters, specifies only those who have a recommendation from a doctor are entitled to buy the drug, and that prescription sales are tax-exempt.

"But that statute didn't use the word 'prescriptions,' " Horne said. "It used the word 'written certification.' "

That was deliberate.

A 1996 voter-approved law allowing doctors to prescribe marijuana was never implemented because the U.S. Drug Enforcement Agency threatened to revoke all prescription-writing privileges of any physician who wrote such an order for a substance that remains illegal under federal law. This new law, mirroring the successful practice in other states, avoids that term.

Horne said as far as he's concerned, that ends the discussion.

"Since they're not prescriptions, then in my view it's taxable, like anything else is taxable," he said.

Horne's finding means the Arizona Department of Revenue will instruct dispensaries to collect not only the 6.6 percent state levy, but any local sales taxes.

Andrew Myers, who managed the pro-203 campaign, expressed some concern.

"We're not wild about the idea of increasing the cost of what essentially is medication for seriously ill people," he said, but no challenge is planned.

But Myers said what Farley wants would be challenged as illegal.

He said it's one thing to tax marijuana like other products. A special tax, Myers said, runs afoul of a constitutional provision barring lawmakers from altering voter-approved measures.

Farley, however, said the tax is justified. He said a 300 percent levy puts the tax on marijuana at the same general level as the tax on cigarettes, which are subject to a $2-per-pack levy.

"People use cigarettes as an over-the-counter medication for various types of things," he said. He also doubts imposing the tax alters what voters approved.

Anyway, Farley said, those who really need the marijuana won't mind paying the extra fee. He figures marijuana sells for $40 an ounce, meaning the sales price, tax and all, would be $160.

Myers said $40 marijuana is a "myth," and the actual price at dispensaries will be 10 times that, putting medical marijuana out of reach of many in need, particularly since the drug is not covered by health insurance.

Source

Arizona Legislature proposes 300% sales tax on medical marijuana

Submitted by Jesse Wentzloff

Arizona Attorney General Tom Horne announced today on the John C. Scott Show that it would be legal in Arizona to impose sales tax on medical marijuana. Although drug prescriptions are not subject to sales tax in Arizona, Horne said the medical marijuana law does not label the medical marijuana prescriptions specifically as a “prescription.”

At first I was annoyed but not surprised by this political maneuver from Horne. In my opinion, if medical marijuana is provided to a patient to alleviate symptoms of disease or symptoms of treatment– which is how the law is written– then it should be considered a drug and, therefore, not taxable. If marijuana were legalized and considered a recreational drug like alcohol or tobacco, it should be taxed at the same rate as other consumer goods (6.6%), which is the tax rate that I thought Horne was suggesting.

But no, that is not the case. In the Arizona Legislature today, several representatives– including southern Arizona Democrats Steve Farley, Bruce Wheeler, Olivia Cajero-Bedford, and Paula Aboud and others– sponsored a bill to charge 300% sales tax on medical marijuana– not the normal 6.6% base state sales tax. (How can this be legal?)

All I can say is WTF are you thinking? Do you have any idea how expensive cancer treatment is? Why would you think it appropriate to add 300% sales tax on one of the few (hopefully) affordable drugs available to these poor people? This is unconscionable.

Loyal readers, it’s time to contact the Arizona Legislature. Here is contact information for the Arizona House of Representatives (where Farley and Wheeler are) and the state Senate (where Aboud, Cajero-Bedford and Kyrsten Sinema [from Phoenix] are). For a full list of sponsors, check out the bill here.

I agree with the Phoenix Chapter of NORML, HB2557 should be called the Drug Cartel Empowerment Act because all it will do is promote the marijuana black market, supplied by violent cartels.

Source

Lawmaker proposes 300 percent tax on medical marijuana

Thu, 01/27/2011 - 00:18

By Howard Fischer

Capitol Media Services

PHOENIX — Arizonans who get a doctor’s recommendation to buy medical marijuana are going to have to shell out at least a little extra money for the state — if not a whole lot.

But users, legal and otherwise, will still be able to wrap the drug in cigar-paper “blunts.”

Attorney General Tom Horne said Wednesday that the marijuana sold at state-regulated dispensaries being set up under Proposition 203 is subject to the 6.6 percent sales tax.

Horne acknowledged that the law, approved by voters, spells out only those who have a specific recommendation from a doctor are entitled to purchase the drug. And he said that prescription sales are exempt from the levy.

“But that statute didn’t use the word ‘prescriptions,’ ” Horne said. “It used the word ‘written certification.’”

That was deliberate.

A 1996 voter-approved law allowing doctors to prescribe marijuana was never implemented because the U.S. Drug Enforcement Agency threatened to revoke all prescription-writing privileges of any physician who wrote such an order for a substance that remains illegal under federal law. This new law, mirroring the successful practice in other states, avoids that term.

Horne said that, as far as he’s concerned, that ends the discussion.

“Since they’re not prescriptions, then, in my view, it’s taxable like anything else is taxable,” he said.

With that in mind, Rep. Steve Farley, D-Tucson, wants to go further — much further. With some Republican support, he is proposing a 300 percent tax on marijuana sold at dispensaries.

Farley agreed that voters decided in November that marijuana is a legitimate drug for the treatment of certain ailments. The measure contains various restrictions, notably that requirement to first get a doctor’s recommendation.

“I just want to charge a co-pay,” he said.

The amount of money at issue is nothing to sneeze at. Horne figures the 6.6 percent levy could generate $40 million for the state, an estimate he said is based on a Denver Post story based on how much marijuana is sold through dispensaries in that community “and applying that prorata to the Arizona population.”

Farley had no estimate. But using Horne’s $40 million as a starting point, a 300 percent levy could produce $1.8 billion a year.

Andrew Myers, who managed the pro-203 campaign, expressed some concern with Horne’s conclusion. “We’re not wild about the idea of increasing the cost of what essentially is medication for seriously ill people,” he said.

But Myers said what Farley wants would be challenged as illegal.

He said it’s one thing to tax marijuana like other products. A special tax, Myers said, runs afoul of constitutional provision barring lawmakers from altering voter-approved measures.

Farley, however, said the tax is justified, saying that 300 percent level puts the tax on marijuana at the same general level as cigarettes, which are subject to a $2-a-pack levy.

“People use cigarettes as an over-the-counter medication for various types of things,” he said. Nor was he convinced that the voter-approved status of marijuana as a legitimate drug to treat certain ailments makes it different.

Anyway, Farley said those who really need the marijuana won’t mind paying the extra fee. He figures marijuana sells for $40 an ounce, meaning the sales price, tax and all, would be $160.

Myers reacted with incredulity.

“Forty-dollar-an-ounce marijuana is a myth,” he said, saying the price from dispensaries elsewhere is more like 10 times that — and putting the cost out of reach of many in need, particularly since the drug is not covered by health insurance.

Farley said he does believe that some people probably could benefit from marijuana. But he argued the real impetus comes from those who eventually hope to legalize the drug entirely for recreational use.

“And if that’s the direction they want to go in, then we might as well tax the heck out of it and benefit from it,” he said.

The issue of how people might smoke the drug, legally or otherwise, comes in an attempt to outlaw the sale of the specialized rolling papers in Arizona.

“Blunt wraps” are rolling papers with some tobacco content. They are officially marketed to those who want to make their own cigars rather than buying one prerolled, most of which are done by machine.

On Wednesday, members of the Senate Committee on Commerce and Energy scrapped, at least temporarily, legislation proposed by the Cigar Association of America to ban the manufacture, sale or distribution of blunt wraps.

Lobbyist Steve Barclay told lawmakers there is no legitimate use for the papers. He said any claim by manufacturers and retailers that people are rolling their own cigars is belied by the fact that far more papers are sold than tobacco to fill them.

But Ron Tully, vice president of National Tobacco Co. said those arguments are a smoke screen.

“It’s a commercial plea to squeeze us out of the market,” he said. Tully told lawmakers that the products his company sells, including the line of ZigZag rolling papers, is crowding cigars off the counters of convenience stores.

Anyway, Tully said, the term “blunts” for a marijuana cigar actually comes from the original practice of drug users hollowing out a short, fat cigar, called a blunt, and replacing the tobacco. That practice, he said, would remain legal.

Sen. Michele Reagan, R-Scottsdale, who sponsored the legislation, pulled it from consideration amid various questions, including the idea of having Arizona ban an otherwise-legal product. But Reagan said she may recraft it, narrowing it to only ban the sale of these items to minors.

Tully said his firm has no problem with that.