Pot Clubs Short California $150 Million in Taxes

And Oakland City Councilwoman Desley Brooks says city will move forward on large cannabis farms.

California state Senator Mark Leno told hundreds of medical marijuana advocates Sunday in Berkeley that his newly reintroduced “medical cannabis patient employment non-discrimination” bill faces a tough road through both houses this year. The same bill made it to Governor Arnold Schwarzenegger‘s desk last year before he terminated it.

Leno, a San Francisco Democrat, has not asked new Governor Jerry Brown if he would sign the bill, which protects patients from being fired for using pot with a doctor’s recommendation. But Leno said Brown holds no love for his bill’s opponents — Meg Whitman donor the California Narcotics Officers’ Association. The association’s lobbyist “is holding the losing hand,” Leno said.

The status quo is a job-killer. As certified by a state Supreme Court decision, qualified medical marijuana patients in California can lose their jobs for failing a drug test, even though they were never high at work. Under the Leno bill, that would change. Tests for-on-the job impairment would replace urine and blood tests.

The presence of marijuana metabolites in urine or blood does not mean a person is high on the job. FDA studies show that THC stays in fat cells for up to 90 days, though typical effects end in two to six hours. The Leno bill would not apply to school bus drivers, health-care workers, and other federally defined “safety-sensitive” occupations.

But the bill will have to fight for air in a 2011 session dominated by budget discussions that will sideline pot issues. Governor Brown’s office says the state has a $25.4 billion deficit this year. Marijuana prohibition may cost $1 billion per year in cops and jail beds, the libertarian Cato Institute has estimated.

Also in Sacramento, two pending bills from Assemblyman Tom Ammiano: 1) The reintroduction of a legalization bill; 2) A medical cannabis omnibus clean-up bill, calling for rules on manufacturing, transportation and distribution at dispensaries. Legislators will likely look to Colorado, where state officials seek heavy taxation and regulation in exchange for profit-taking, much like casinos and liquor.

Oakland to Press Play

Old wounds tore open anew Sunday as hundreds of marijuana activists gathered in Berkeley to sketch out visions for the future of drug policy in the state. The California chapter of the National Organization for the Reform of Marijuana Laws set up the day-long series of panels and discussions at The David Brower Center in downtown, drawing Leno, Ammiano, Prop 19 spokespeople, their enemies, major dispensary owners, lawyers, growers, and activists.

The event saw calls for everything from the incremental approach of the Drug Policy Alliance to radical calls to throw open the prisons and jails, and delete health and human safety codes banning pot. At least two 2012 California legalization initiatives are being openly discussed: one by the former Prop 19 team, and a more radical proposal from a group who failed to gather enough signatures in 2009.

Calls for increased self-regulation occurred throughout the day. The industry fears a backlash to the perceived health and safety problems of unscrupulous doctors, shady clubs, indoor farm fires, and robberies. San Francisco Medical Society staffer Steve Heilig called Prop 215‘s implementation “a disaster.” “There shouldn’t be a thug factor” he said, advocating to scrap California’s program in favor of New Jersey’s new, highly restrictive regime.

As pot farm fires make headlines in Oakland this week, Councilwoman Desley Brooks told the crowd that Oakland will “push the envelope” and again try to permit four, 50,000-square-foot medical marijuana growing facilities. Brooks blasted council critics like Oakland’s city attorney, Alameda County’s district attorney, and retired federal officials who publicly wondered if council members could go to jail for their plans. The Drug Enforcement Administration has never contacted the city in regards to the farm permitting process, she said. “There’s been much hype, and that’s been problematic,” Brooks said.

The pending farm permits will be tied to four new dispensaries, bringing the city’s total to eight. Oakland took in almost $1 million in 2010 on estimated medical marijuana sales taxes and business taxes.

In a potential sign of accommodation, the DEA has reportedly allowed eighteen permitted pot farms in Mendocino County. The county’s new medical marijuana garden certification program includes third-party inspections and police oversight. “We got three calls from the DEA,” Mendocino Supervisor John McCowen said Sunday. “The DEA people said, ‘As far as I can tell, you are doing it right.'”

Seeds & Stems

Less than half of California’s dispensaries are paying mandatory state sales taxes, the Board of Equalization reported Sunday in Berkeley. Representative Allen Davenport said the board is collecting its 8.75 percent sales tax from about 300 dispensaries, and estimated another 500 are not paying taxes. The board has audited about forty dispensaries, and estimates the state collects roughly $100 million in sales taxes from dispensaries each year, meaning more than $150 million is likely going uncollected.

Some dispensaries are afraid to pay up, because federal authorities could use tax receipts as proof of crime. Davenport said the board has a “miscellaneous” business category that can shield clubs from the DEA.

The board wants to pursue a tax stamp system for dispensary pot similar to the stamps put on tobacco, Davenport said. It could buy clubs protection from raids. “We’re going to stand up to the DEA and say, ‘We have state law to administer here,'” he said.

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