Monday, January 14, 2008

Legal marijuana benefits state

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 -

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