Medical marijuana sales tax may end

By ROB BURGESS This e-mail address is being protected from spam bots, you need JavaScript enabled to view it The Daily Journal 01/19/2008 http://www.ukiahdailyjournal.com/local/ci_8020255

Medical marijuana dispensaries in California, including the two that currently operate in Mendocino County, may soon be exempt from state sales tax, said a representative from the California State Board of Equalization.

The regulations will soon reflect the change that when marijuana is prescribed by a physician it is determined to be a medicine, said Sarah, the representative, who refused to reveal her surname.

In order to be exempt from sales tax, the business must conform to Regulation 1591, which states in part that the item must qualify as a medicine, said the representative.

"Regulation 1591 defines a medicine, in part, as any substance or preparation intended for use by external or internal application to the human body in the diagnosis, cure, mitigation, treatment, or prevention of disease and which is commonly recognized as a substance or preparation intended for that use," stated a special notice released by the board titled "Information on Sales Tax and Registration for Medical Marijuana Sellers."

The change will be a reversal from the board's previous position.

In February 2007, the board sent out a notice to dispensaries, urging them to obtain a seller's permit like any other retailer.

There are currently two dispensaries operating in the county: Herban Legend in Fort Bragg and Reflections of Avalon in Ukiah, which opened last month on South State Street just outside of city limits.

A third dispensary, Mendo Remedies in Laytonville, was open until last month, when it closed its doors for good. Paula Deeter is the owner of Herban Legend in Fort Bragg. Deeter said she has always adhered to federal tax laws.

"I wish they would make up their minds," she said. "We were unclear at first if it was a taxable item. We've always paid federal income tax."

On April 20, 1996, the U.S. Food and Drug Administration drafted a news release that declared that smoked marijuana had no medicinal value.

"A growing number of states have passed voter referenda (or legislative actions) making smoked marijuana available for a variety of medical conditions upon a doctor's recommendation," the memo stated. "These measures are inconsistent with efforts to ensure that medications undergo the rigorous scientific scrutiny of the FDA approval process."