Ow Ma’am! The Devil’s in the Detail of California’s AUMA Act
California’s Adult Use of Marijuana Act (AUMA) sounded like a good idea when it arrived. The bill aims to skip right over existing medical marijuana legislation and take a blanket approach to social and medicinal use. To refresh your memory, AUMA’s backers want to:
– Allow adults aged over 21 to possess up to an ounce of marijuana, and
– Cultivate up to six plants on their own properties for personal use
In return, California would, if the bill passed, tax sales at an additional rate of 15% and stand to benefit from a potential $1 billion annual windfall. This is in strong contrast to NORML’s position on medical marijuana. NORML wants the medicine treated as prescription medication, where a physician (and not a lawmaker) decides on the quantity allowed. We have two more problems arising from what AUMA wants to do.
Will You Come Into My Parlor, Mr. DEA Administrator
If Chuck Rosenberg, acting administrator of the U.S. Drug Enforcement Agency (DEA) has time to read Mary Howitt’s little masterpiece, he should know that persistence pays off especially when the other party drops their guard. The medical marijuana impasse has gone on too long for many. Those in favor demand more material for research, while the law enforcement agency will not release its grip.
The legal way to loosen the logjam is to reclassify marijuana down from Schedule 1 to Schedule 2. Elizabeth Warren and other Democratic senators are calling for this to happen with increasing fervor. All eyes are on the DEA who promised a decision ‘in the first half of 2016’. It is another matter whether they will alter their position that the plant is among ‘the most dangerous class of substances’.
Were Warren and her supporters to succeed in a downgrade to Schedule 2, this might extend the sole right of the University of Mississippi to cultivate marijuana for research. The cliffhanger needs seeing in the context of the broader conversation. Perhaps Mr. Rosenberg will take opinion from the 58% of Americans who spoke for marijuana use to be legal late last year.
NORML Attacks Both CA Medical Marijuana Tax Bills
The National Organization for the Reform of Marijuana Laws NORML has been striving since 1970 to ‘move public opinion sufficiently to legalize the responsible use of marijuana by adults, and to serve as an advocate for consumers to assure they have access to high quality marijuana that is safe, convenient and affordable.’
It has come down hard on two proposals under consideration by California legislators regarding taxing commercial medical marijuana. Briefly, these suggestions are:
– SB 987 – by Sen. McGuire (Healdsburg) seeking to apply a 15% excise tax ON TOP of the prevailing sales tax of 7.5% and more, PLUS local business levies where these apply
– AB 2243 – submitted by Asm. Wood (Headsburg) wanting to impose a cultivation tax of $9.25 PER OUNCE on medical marijuana flowers, $2.75 PER OUNCE on leaves, and $1.25 ON EACH immature plant sold to licensed distributors in the state.
Transitioning Your Mutual Benefit Corp to a for Profit business in California
California (and the rest of the U.S.) seems to have a prevailing reticence to allow anybody to turn an honest profit out of medical marijuana. You can grow your herb and share it with your friends in one or other non-profit arrangement if agreed to by your state. Under the not-for profit model “profits” are not allowed. With new legislation in play, traditional for-profit entities will be allowed to operate MMJ businesses. So what about existing not-for-profits (mutual benefit corporation) that want to transition to a for profit business? Hilary Bricken wrote an explanation for Above the Law concerning how we got into this mess. This set us to thinking about where to go from here.
As states like California realize that by collecting sales tax on MMJ they are de facto recognizing it as a business, the question arises how to migrate a not-for-profit interest to a full-blown company that will sell for a good return once the floodgates open, and the anti-medical marijuana brigade shuts up shop. The problem is you cannot sell something unless you own it.
Sacramento Board of Equalization is Flooded with Cash
Walking into the Sacramento board of equalization(BOE) tax agency on quarterly sales tax day, one might think they were selling medical marijuana themselves. If we went into the back office and saw the overflowing safe and wads of banknotes on the desks, our suspicions could increase, although we would still not be correct.
One of the stranger twists in the tale of medical marijuana in the States, is people wanting to pay their sales tax are unable to do so by direct deposit, EFT, or any other traditional banking method. This is because cannabis is still illegal in any form from a federal viewpoint, and the nation’s banks are wary of being mixed up in a Federal Reserve bust.
This leaves licensed medical marijuana dispensaries – along with growers, distributors and other marijuana-related businesses only one choice. This is to do everything by cash. However, this is not ideal for the Sacramento tax collection agency that was designed to receive checks and electronic payments.