Sales tax on medicinal pot largely a non-issue in Aspen
November 19, 2009
ASPEN – While Colorado officials said this week that the burgeoning medical marijuana business will be required to collect sales taxes and contribute to the state’s coffers, at least three of Aspen’s four dispensaries are already doing so.
State Attorney General John Suthers concluded in an opinion issued Monday that medical marijuana is considered personal property that can be taxed and shouldn’t be treated like prescription drugs, which are tax exempt.
While the operators of some local dispensaries don’t necessarily agree that marijuana should be treated differently than other prescription medications, they say they want to do their part to contribute to the well-being of the local and state economies.
“I’m back and forth on the whole taxing thing,” said Billy Miller, a co-owner of the L.E.A.F. dispensaries in Aspen and Carbondale. “I really think the taxing thing itself is all wrong because it’s medicine. If you’re going to tax me, tax the pharmaceutical companies, too. I think it should be a level playing field.”
On the other hand, Miller said he thinks collecting sales tax is the right thing to do as a member of the local business community. In fact, he said, he was under the impression that he was required to collect sales tax – 9 percent in Aspen and 8.4 percent in Carbondale. Of that, 2.9 percent is the state’s sales tax. In Aspen, the total sales tax also includes money that goes to Pitkin County and the Roaring Fork Transportation Authority.
Jim Harmon, comptroller with the city of Aspen’s finance office, said Wednesday he wasn’t sure whether local marijuana dispensaries were collecting sales tax or not and was looking for direction from the state Department of Revenue on the issue. All of the dispensaries in Aspen were required to obtain a business license, he said.
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According to state revenue spokesman Mark Couch, the agency surveyed about 60 dispensaries and found half of them already had sales tax licenses and were paying taxes because they sold other products, but that not all of them were paying taxes on marijuana sales. With the backing of Suthers’ opinion, he said the department would begin collecting taxes on all medical marijuana sales immediately. Meanwhile, state Sen. Chris Romer, a Denver Democrat, said he plans to introduce legislation in January that would require dispensaries to buy licenses, as well as pay the state’s 2.9 percent sales tax.
Denver plans to notify dispensaries that it will start collecting municipal sales tax starting in December.
Jordan Lewis, a partner in Silverpeak Apothecary in Aspen (originally called The Apothecary Aspen), said his business has been collecting sales taxes since it opened and called the move a positive one for the fledgling industry.
Marijuana support groups in Colorado hailed this week’s decision as a validation of their legal rights and a legitimization of the industry.
As for the philosophical debate over whether marijuana, as a medicine, should be taxed – “that’s a discussion for down the road,” Lewis said.
Medical marijuana is not prescribed, but patients must have a physician’s recommendation and register with the state in order to qualify to buy the substance from a dispensary or legally grow their own.
Brett Nelson, a partner in Ute City Medicinals in Aspen, said he was torn over the tax issue. Medical marijuana, he noted, allows some patients to stop taking certain prescription medications on which they don’t have to pay sales tax.
“On the other hand, we want to make a good name for this industry,” he said.
A spokesperson for Aspen’s fourth dispensary, Alternative Medical Solutions, could not be reached for comment.
Whether the city of Aspen will track marijuana sales specifically with its monthly sales tax reports remains to be seen. Revenues collected from marijuana sales could be grouped under the food and drug category in the city reports, Harmon said. That grouping includes groceries and non-prescription medications.
It’s volume of sales that dictates how segments of the retail economy are broken out in the reports, he said. There is also a miscellaneous category.
“If there was a desire on the City Council to see that broken out, we’d create a separate category,” Harmon said.
The state’s Couch said he had no estimate on how much medical marijuana sales could generate in sales tax revenues, but said California collected $11.4 million on sales of $142 million in 2006.