Month: March 2018

Here is a quick look at local cannabis taxes in the eight states with legal recreational cannabis commerce.

A starting point is a State of Connecticut document that’s close to right:  https://www.cga.ct.gov/2018/rpt/pdf/2018-R-0034.pdf

“Additional local taxes apply in all of the states except Maine. Local marijuana excise taxes may apply in municipalities in Alaska, Colorado, Massachusetts, and Oregon. Additional local sales taxes may apply in Alaska, California, Colorado, Nevada, and Washington in jurisdictions imposing such taxes.”

They missed local excises in California and Nevada, but I agree that Washington and Maine don’t have local excises. (Local sales taxes aren’t worth looking at.)  [UPDATE 16 October 2019:  WA lets localities add a that looks just like the WA excise tax, a percentage of price.  Call it a sales tax or an excise tax: I don’t see the difference.  So my distinction between sales and excise taxes is questionable.]

California is the state where local taxes are the biggest issue. Local taxes routinely pass when voters are asked about them. https://newrevenue.org/2016/11/10/5026/. Continue reading “Most legalizing states allow local cannabis excise taxes”

UPDATE, 30 March 2018:

On Twitter, Phil Hackney (@EOTaxProf ) has this and more:
“To be clear this is only a procedural document. It says the IRS will not issue a ruling on orgs claiming exempt status in as an org advancing a line of business if that business involves marijuana. Not the same as saying such orgs do not qualify; no need for such orgs to apply.”  https://twitter.com/EOTaxProf/status/979475478452035584

I agree that the IRS “no letter” rule for marijuana non-profits is of minor direct legal consequence. But people in cannabis community might understandably see this as
(1) deliberately singling them out;
(2) evidence of Administration antipathy – evidence of more to come.

ORIGINAL POST:

A recent IRS ruling, sent to me by Professor Francine Lipman of UNLV Law School, is making waves:  The IRS says it “will not issue a determination letter [about non-profit status] when the request concerns an organization whose purpose is directed to the improvement of business conditions of one or more lines of business relating to an activity involving controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law regardless of its legality under the law of the state in which such activity is conducted.”

“Improvement of business conditions” I don’t quite get. I’m confused. This is not my field. Off the top of my head:

I’m thinking of a distinction between trying to help people break a law and trying to change a law. Continue reading “Nonprofit status for marijuana groups”

California has a ploy to prevent the federal government from cracking down on medical cannabis. I think the state’s ploy is ill-considered and far-fetched.

Here’s the ploy:

“Reporting the cultivation tax:

“. . .

“– You are required to enter adult-use ounces separately from medicinal ounces for each category.”

https://cannabis.ca.gov/2018/ 03/13/important-information- for-cannabis-distributors/

Now I think one of the possible advantages of taxing medical cannabis like adult-use is that cultivators don’t have to decide which is which so soon.  Let the market decide, based on demand as time goes on. Otherwise, shortages and gluts will develop, as identical products have been put into a category that proved wrong. Continue reading “California Scheming”