Link via Fortune
As a small business owner, I regularly deal with the State Board of Equalization regarding sales tax reports and occasional audits. This Fortune article is quite enlightening regarding marijuana and the BOE. Key section:
In the early days of dispensaries the California Board of Equalization, which collects state and local sales tax, refused to issue seller’s permits to dispensaries that sought them — the necessary prelude to paying sales tax in the state. The board viewed such establishments as certainly illegal under federal law, and possibly illegal under state law.
In October 2005 the board changed tack and began allowing dispensaries to pay sales taxes if they wanted, and in 2007 it completed the reversal by requiring them to pay sales taxes and demanding that they do so retroactively to October 2005.
The board assured the dispensaries in a February 2007 letter that it would now issue seller’s permits even if the dispensary refused to answer portions of the standard application — identifying the product sold, for instance, or listing suppliers — due to “concerns about confidentiality or self-incrimination.”
Since sellers’ permits do not require establishments to identify themselves as medical marijuana dispensaries, the board has no hard records on sales taxes collected from them. Unless there is extremely poor compliance by dispensaries, however, the numbers should be robust.
Harborside alone reported about $15 million in sales in 2008, for instance, and DeAngelo estimates that the average revenue for each of California’s 700 dispensaries probably ranges from $3 million to $4 million annually. If so, gross statewide medical cannabis sales are approaching $2.5 billion, generating taxes of around $220 million. That does not include the state and federal income taxes that dispensaries and their employees also pay, and employee payroll taxes.
