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A brief History of how Sacramento taxed medical marijuana


Tax season just ended, so I thought I’d talk about something specific to medical marijuana patients: the sin tax on medicinal cannabis that Sacramento voters voted into office in 2010 via Measure C.

In a city council session early in Summer 2010, before the midterm election, the Sacramento City Council was having discussions about the medical marijuana ordinance. They were discussing making dispensaries licensed and legal in Sacramento City, when a city council member thought it would be prudent if they put a marijuana tax on the ballot. The idea behind it was that if Prop 19 made it legal for the recreational use of cannabis, they would need a tax structure in place in order to make sure that the city was compensated for recreational marijuana sales.

In late June, a new Business Operations Tax structure was proposed. The BOT had not been updated since 1991 and “modernisation” was in order. The numbers thrown out at that meeting were a gradual 3-4% tax, no higher than 5% on medical cannabis donations and 10% on recreational over the counter sales.Thirteen citizens, including Ryan Landers of the American Alliance for Medical Cannabis, Joy Cole of SacPatients and Lanette Davies of Crusaders for Patients Rights, spoke out against any tax higher than 2%.

The Council instructed staff to draft it; both Sandy Sheedy District 2 and Steve Cohn district four at the time requested an option under 3%, closer to Oaklands 1.8%. Staff returned with the following numbers on July 13th: 2-4% for medical cannabis and 5-10% for recreational sales.

Joy Cole Cannabis Acivist protesting Measure C

Several other changes to the BOT were also being proposed – not related to marijuana. It was Kevin McCarty who then proposed that the marijuana tax be a separate vote from all the other controversial tax proposals. Eleven members of the community again spoke out against the tax.

Joy Cole cannabis activist speaking against the Tax in 2010

Sheedy motioned to pass the bill. It passed unanimously and was put on the November 2010 ballot. Some of us in the medical cannabis community viewed it as a sin tax and included in it in our grievances with the city, including protest signs and rallies against it prior to November. Others hoped that a small tax of 2% would help the city and encourage them to help our community. When the law was written into the ballot it started at 4% on medical and 10% on recreational. The cannabis community, unaware it could have filed an opposition so we remained silent and no argument was filed against the bill despite this discrepancy.


I’m sure most voters voted thinking that the tax applied primarily to recreational use. Since Prop 19 failed, for the first time ever people were forced to pay a tax on their medicine.

When the law went through, the city just decided to START at 4% and not 2% as was discussed in the vote. This is an extra tax added on top of the Board of Equalization California sales tax of 8.75%, forcing patients who choose cannabis as medicine and want to do so at a legal facility to pay 12.75% on their medicine. People taking Benzodiazepine, and heavy narcotics and opiate users are exempt from paying any tax on their medicine, and no one would dare defy big pharma by opposing it.

In implementation, the city did not mess around – they really wanted to ensure they would get their money. There is no annual payment, like the IRS, or quarterly payment like the BOE. Every month dispensaries are forced to take the their total sales and multiply it by 4%, fill out a form, attach a check and send it to the city revenue division. Failure to comply incurs penalties.

It would seem the city set this up because they wanted to make sure that they were not losing any revenue – what with dispensaries closing and being raided by the DEA. Despite having collected two million dollars from patients to date, since the inception of measure C the city has never offered any protection from raids, landlord letters or harassment from the federal government. Many cannabis collectives’ bank accounts have been seized by federal prosecutors because their money was deemed “illegal” as it was generated by a schedule one narcotic. Five or so raids were conducted against city-inspected tax-paying collectives (one of which was El Camino Health and Wellness that actually got its city permit). We haven’t heard whether or not the the City Council was considered a co-conspirator too for accepting 4% of this tainted marijuana money.

Dispensaries were paying these taxes and extremely high licensing fees with the promise that they were going to get some sort of legitimacy in the eyes of the city. Then, after the federal crackdown in October of 2011, the city shut down its process and has not moved along with licensing any dispensary, leaving all but one collective in a non-licensed state. The dispensaries still pay the 4% tax, but are in some state of limbo rather than moving toward local legal status.

So, federal prosecutors state that they are not going after places following local law, but local law refuses to complete its promise to license these facilities, all the while still benefitting from the revenues. It seems hypocritical.

I’m not saying that the city shouldn’t collect taxes, however, it needs to make up its mind. Are marijuana dispensaries an acceptable source of revenue or not? If they are acceptable, then the City can collect its tax and also push back against federal forces working inside their borders as Oakland has tried to do, or get rid of the tax and declare them all illegal. What we have here is a case of having it both ways.

There are some City Council members who have expressed a desire to have ZERO dispensaries in their districts. Meanwhile those City Council members who support medical marijuana are unwilling to stand up to these council members that are biased against marijuana. In addition, the members on our side encourage some of us in the community lobbying to “not to rock the boat” and to not exercise our freedom of speech with these council members that are “afraid” of cannabis infiltrating their community, worried we’re going to upset them and they will vote against us. Not one member on the council has ever considered that cannabis patients have a right to this medicine by democratic vote and that anti-marijuana council members are violating those rights. No one is willing to tell these bigoted City Council members that they are just that discriminating. So, an entire district may have to go without at safe access to marijuana because one person doesn’t want it. They take no surveys or polls, just random knee jerk reactions to complaints from a very small percentage of their citizenship. There been no votes in the individual Sacramento Districts to see what people in the respective districts want as far as dispensaries in their neighborhood. Just a councilmember voting based on their personal feeling about marijuana.

I propose if there’s a district member that doesn’t want cannabis providers in their district, then their districts should not benefit from any of the taxes collected from medical marijuana. It just doesn’t seem fair for these politicians to have their districts collect revenues from establishments they deem to be illegal or undesirable. The schizophrenia of the city council seems to be the perfect good cop/bad cop balance to keep dispensaries in small number, shake them down for their non-profit donations and look to the federal government like they are doing something about the nuisance that is medical cannabis-dispensing collectives.

The next time you go to a buy your medical cannabis, don’t freak if there’s is a 12.75% added to your total; some dispensaries include the tax and others add it on, but trust me, they are all paying it or they would not be allowed to stay open.

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