Community Voices / The Bakersfield Californian
January 11, 2008
Federal Drug Enforcement Agency raids on California's medical
marijuana dispensaries are costing the state's taxpayers millions of
dollars in lost revenues. The DEA has not only closed facilities that
were paying millions of dollars yearly in sales taxes, but also
seized as much as $450,000 in sales tax payments that were in transit
to the state Board of Equalization.
Among them was a $350,000 electronic payment to the BOE from the
Compassion Center of Alameda County, which the DEA seized from the
bank on Oct. 30.
Although the DEA has tried to portray dispensaries as illegal drug
dealers, records show they have operated as legal businesses, paying
income, payroll, business and sales taxes, and offering workmen's
compensation, unemployment and health insurance benefits to their
Several dispensaries closed by the DEA had licenses to operate from
local governments, including facilities in Alameda County, Morro Bay
and Kern County.
Nature's Medicinal in Bakersfield paid almost $1 million in taxes
from 2005 until its closure in 2007, including $203,000 in state and
federal income taxes, $365,000 in payroll taxes and $427,000 in sales
taxes. Included was a $51,935 check to the state Board of
Equalization issued on April 27, which bounced when the DEA seized
Nature's Medicinal's bank account on May 1.
Nature's Medicinal reopened and tried to repay their taxes in monthly
installments of $9,000. They made two payments before the DEA raided
them again and seized all of their money. Nature's Medicinal had 25
employees, eight of whom were indicted and the rest left unemployed
and without health insurance due to the raid.
The DEA has tried to portray dispensaries as profiteers by citing
gross sales revenues in the millions of dollars. However, their net
income is modest when their costs are taken into account. For
example, U.S. Attorney McGregor Scott charged that Nature's Medicinal
in Bakersfield made $16 million in marijuana sales.
However, he failed to mention that their indictment shows they spent
$13 million on the purchase of product not to mention payroll, rent,
overhead and nearly $1 million in taxes.
Altogether, DEA enforcement actions have deprived the state's economy
of tens of millions in tax revenues plus hundreds of paying jobs.
For example, the California Healthcare Collective Inc. in Modesto
paid some $500,000 in sales taxes from its opening in December 2004
until its closure by a DEA raid on Sept. 27, 2006. CHC had 22
employees who were left unemployed by the raid.
The retail value of California's medical marijuana market is
estimated at $870 million -- $2 billion per year. This is enough to
generate some $100 million in sales taxes alone. At this time of
budget deficits, we can ill afford the DEA's war on medical
marijuana. Californians are better off having medical marijuana
distributed by tax-paying businesses than we are by being taxed in
order to arrest, prosecute, and imprison medical marijuana providers.
Dale Gieringer is the director of California NORML, a non-profit
organization dedicated to reforming California's marijuana laws.
California NORML, 2215-R Market St. #278, San Francisco CA 94114
-(415) 563- 5858 - www.canorml.org