Karma: Oakland : Tax on top of Taxes

Oakland's marijuana legalization initiative is still a Trojan Horse August 16, 3:54 PM · J. Craig Canada -

Oakland's marijuana legalization initiative is still a Trojan Horse
August 16, 3:54 PM · J. Craig Canada - Santa Cruz County Drug Policy Examiner



While Oakland's Regulate, Control, and Tax Cannabis Act of 2010 (ROT 2010) has been amended to exclude California's current medical marijuana laws from two items, it could still be a Trojan Horse.

For one thing, the two items that exempt California's current medical marijuana laws apply only to sales, tax, and possession; and this only in cities.

Nowhere in the proposition are medical marijuana patients, providers, and caregivers exempted from its cultivation, distribution, transportation, licensing, and administration requirements. And nowhere does the phrase "except as permitted under Health and Safety Section 11362.5 and 11362.7 through 11362.9" apply to "local government" or "county".

Proposition 215, The Compassionate Use Act of 1996, became California Health and Safety Code §11362.5. The California Medical Marijuana Program (MMP) was passed by the legislature as SB 420 and signed by Governor Gray Davis in 2003, just before he was recalled and replaced with Arnold Schwarzenegger. It became California Health & Safety Codes §11362.7 through §11362.83.

Initiatives in California are of higher legal authority than legislation and therefore Prop 215 (§11362.5) trumps the MMP (§11362.7 through §11362.83).

What's wrong with the Regulate, Control, and Tax Cannabis Act of 2010 (ROT 2010)

The first thing to note is the phrase "except as permitted under Health and Safety Section 11362.5 and 11362.7 through 11362.9". There is no California Health & Safety Code §11362.9. There are no California Health & Safety Codes between §11362.83 and §11363.

The next thing to note is the use of the words "city", "county", and "local government". In §11304(d)(vi) ROT 2010 defines "local government" as "city", "county", or "city and county". (Coincidentally, there is only one city/county in California and that is San Francisco.)

ROT 2010 consists of 5 sections: 1 - Name; 2 - Findings, Intents, and Purposes; 3 - Lawful Activities; 4 - Prohibition on Furnishing Cannabis to Minors; and 5 - Amendment.

The first two sections are essentially window dressing and have no direct effect on law except, perhaps, to act as guidance when questions of interpretation arise. It is in Sections 3, 4, and 5 that the actual legal language appears.

The amendments to ROT 2010 made 4 Aug 09 consist of appending the phrase "except as permitted under Health and Safety Section 11362.5 and 11362.7 through 11362.9" to items 7 and 8 of Section 2 under Purposes. Neither the word "county" nor the phrase "local government" appear in these items, but only the word "city". Further, those items are specific to buying, selling, taxing, possession, and consumption. The words, "cultivation", "processing", and "transportation" do not appear.

Items 7 and 8 have to do with prohibiting sales in "cities" that do not tax marijuana while allowing the possession and consumption of small amounts for personal use in private.

While it appears the intent of the amendments is to prevent ROT 2010 from impacting current California medical marijuana law, patients, and providers; a strict reading reveals this is not what it says.

Ironically, it appears that while it would be illegal to sell recreational marijuana in a city that doesn't tax it, selling recreational marijuana in an unincorporated area where the county is the "local government" would be legal unless and until the county enacts a marijuana tax or prohibits sales. Could it be argued that if ROT 2010 had meant "county" or "local government" it would have said it?

Previously, I stated this initiative was a treacherous Byzantine Maze and a Trojan Horse. Then, upon learning it had been amended I published an article announcing that it no longer appeared any of the initiatives filed in California would threaten California's current medical marijuana laws. It now appears this may not be the case.

Section 3, Lawful Activities, is the meat of ROT 2010. It is comprised of four sections of law to be added to the California Health and Safety Code as sections 11300 through 11304.

§11300 legalizes possession, processing, and transportation of up to an ounce for personal consumption and cultivation of up to 25 square-feet for personal use. It also prohibits consumption in public and smoking marijuana anywhere children are present as well as sales except by licensed vendors. Neither the words "city", "county", or "local government" appear in this section. Since the impact of this initiative on California's current medical marijuana laws is exempted only for "cities" and only with regard to "sales", "tax", "possession" and "consumption" of marijuana, it could be interpreted to set limits for patients on possession and consumption in unincorporated areas where the local jurisdiction is the county.

Since "cultivation" is nowhere in the document related to the exemption for current California medical marijuana law, ROT 2010 could be used to set marijuana cultivation limits statewide, for medical patients as well as recreational users.

This is all the more likely because recently the California Court of Appeals struck California Health & Safety Code §11362.77 enacted by the legislature which limits the number of plants and weight of dried bud medical marijuana patients can have because it conflicts with Proposition 215 (§11362.5) which has no limits. This matter is currently on appeal to the California Supreme Court.

Since ROT 2010 as an initiative has the same authority as Proposition 215 and is 14 years afterwards, it could well be argued that it was the intent of the voters to set limits where there were none, or to allow each city or county to set limits on how much patients may cultivate and possess. This possibility is further supported by the conspicuous absence of Health & Safety Codes 11362.5 and 11362.7 through 11362.83 in the list of California laws ROT 2010 is not intended to affect in Section 2, C - Intent.

The limits in Santa Cruz County for medical marijuana patients are 3 pounds and 100 square feet of canopy. Three pounds is what your average medical marijuana patient will use in one year. Twenty-five square feet is about enough room to bloom a couple of plants. If you're lucky, an indoor plant will yield 2.5 ounces. If you're not, you'll get an ounce or less per plant. The bloom cycle is 8 weeks and it takes at least as long to grow a clone to the point it will produce enough bud to be worth harvesting.

A perpetual garden requires at least two different areas with different lighting; one for cloning and growing the clones in a vegetative state, and another for blooming the clones. Many patients would not be able to supply themselves if limited to 25 square feet total for their grow area, particularly those who are not master gardeners, and especially if they grow outdoors and can only bring in one crop a year.

And then there are crop failures.

Take a look at its proposed §11300(a):

Notwithstanding any other provision of law, it is lawful and shall not be a public offense under California law for any person 21 years of age or older to:
(i) Personally possess, process, share, or transport not more than one ounce of cannabis, solely for that individual's personal consumption, and not for sale.

How does someone "share" something that is "solely for that individual's personal consumption"?

Does this section apply "notwithstanding" current California medical marijuana laws?

Similarly, §11301 states:

Notwithstanding any other provision of state and local law, a local government may adopt ordinances, regulations, or other acts having the force of law to control, license, regulate, permit, or otherwise authorize, with conditions, the following:
...(b) retail sale of not more than one ounce per transaction, in licensed premises, to persons 21 years of age or older, for personal consumption and not for resale

Does "Notwithstanding any other provision of state and local law..." include California Health & Safety Codes 11362.5 and 11362.7 through 11362.83?

Could this be used to argue that sales to medical marijuana patients under 21 years of age is prohibited in unincorporated areas where the local jurisdiction is the county?

Keep in mind, California's current medical marijuana laws are only exempted from the provisions of ROT 2010 in "cities" and with regard to "sales", "tax", "possession", and "consumption" as stated in the Purpose.

Item (k) of this section authorizes "appropriate fees or taxes pursuant to §11302". Could it be argued this was meant to authorize counties to tax medical marijuana even though it is medicine? And even though cities are not required to tax it in order to sell it to medical marijuana patients as stated in the Purpose? Why do items 7 & 8 in the Purpose say "city" instead of "local government"?

If I find this initiative treacherous and confusing, what about the voters? The legislature? The courts?

The potential points of conflict raised here are only a sample of the problems found in The Regulate, Control, and Tax Cannabis Act of 2010 (ROT 2010) by Oaksterdam U.

What's wrong with the Tax, Regulate, and Control Cannabis Act of 2010 (THC 2010)

Unfortunately, upon reflection, the Tax, Regulate, And Control Cannabis Act of 2010 (THC 2010) doesn't appear to offer any more protection to medical marijuana patients than ROT 2010. While this proposition from Tax and Regulate Cannabis California 2010 states first among its intentions to "prohibit furnishing cannabis to minors under the age of 21, except for medical use", the only other place the word "medical" is found in the initiative is in item (h) under Intent which states, "Make cannabis available for scientific, medical, industrial, and research purposes".

Further, while cultivation for personal consumption is permitted and there is no limit defined for personal consumption, nowhere is medical sales exempted from the $50 per ounce tax. §11302(e) states "Only Cannabis commercially cultivated, distributed and/or sold shall be taxed". Does this mean all cannabis that is not grown for personal consumption will be taxed? Are medical marijuana collectives and cooperatives commercial cultivation?

Should these initiatives make the ballot and pass, will the courts determine that the intent of the voters was to replace or supersede Proposition 215 which has withstood every challenge for more than a decade? Why-oh-why couldn't an institution that makes money teaching people the law regarding medical marijuana come up with something as clear, unambiguous, and straightforward as Tom Ammiano's Marijuana Control, Education, and Regulation Act (AB 390)? How did they get through 14 drafts without exempting current California medical marijuana law and, particularly, The Compassionate Use Act of 1996?

What's right with The Marijuana Control, Education, and Regulation Act (AB 390)

AB 390, in Section 1 (h) under intent states:

To exclude from the fees and regulations imposed by this Act marijuana that is for other uses than smoking and ingestion, and to exclude medicinal marijuana from fees under these provisions.

While it does not exclude medicinal marijuana from the "regulations" imposed by the Act, it does exclude it from the taxes and fees. Unlike either proposed initiative, this intent is written into the actual legal code under §34004(a) which states:

However, no fee shall be imposed under this part on marijuana used medicinally with a doctor's recommendation as specified in Section 11362.5 of the Health and Safety Code.

Further, by listing the codes it repeals, and not including California's current medical marijuana laws among them, and as an act of the legislature and not an initiative by the people, AB 390 ensures that Proposition 215 will remain intact.

It should be noted that while AB 390 and THC 2010 have a "statutes repealed" section and do not list existing California medical marijuana laws among these statutes, ROT 2010 has no such section. Instead, it lists the statutes it is not intended to affect and does not include existing California medical marijuana laws among them.

As for the licensing, AB 390 sets limits for a commercial cultivation or wholesale license at $5,000 for the initial application and $2,500 for annual renewal.

How to fix ROT 2010

If the proponents have 15 business days from the time they filed with the attorney general to amend ROT 2010, they still have until the 18th to make amendments.

If I could, I would amend Section 2, B, 7 and 8 by replacing "city" with "local government".

I would also add Health & Safety Codes 11362.5 and 11362.7 through 11362.83 to the statutes ROT 2010 is "not intended to affect the application and enforcement of" under Section 2 C 2.

Under Section 3, change "Notwithstanding any other state or local law" and "Notwithstanding any other provision of law" to "except as permitted under Health and Safety Section 11362.5 and 11362.7 through 11362.83".

Under Section 5, Amendment, add something like "Nothing in this section shall authorize the legislature to amend H&S 11362.5 without approval of the voters."

In addition to THC 2010 and ROT 2010, there is also The Common Sense Act of 2010. The proponents of these three California marijuana legalization initiatives will have until the time they turn in their signatures to withdraw the initiatives from the 2 Nov 2010 ballot. If more than one initiative wins, the one with the highest number of votes will trump the others.

If AB 390 should pass before the 2010 election and these initiatives have not been withdrawn, and if they win, will they be used to supersede AB 390 and dismantle Proposition 215?

For more info:
Office of The Attorney General, State of California - Initiative Measures
The Marijuana Control, Regulation, and Education Act (AB 390) - CA State Assembly | 23 Feb 09
The Tax, Regulate, and Control Cannabis Act of 2010 (THC 2010) - CA Attorney General | 15 Jul 09
The Regulate, Control, and Tax Cannabis Act of 2010 (ROT 2010) - CA Attorney General | 28 Jul 09
The Common Sense Act of 2010 - California Attorney General | 4 Aug 09

Legalize Marijuana in California - The Marijuana Control, Regulation, and Education Act (AB 390)
California Cannabis Initiative - The Tax, Regulate, and Control Cannabis Act of 2010 (THC 2010)
Tax and Regulate Cannabis - The Regulate, Control, and Tax Cannabis Act of 2010 (ROT 2010)
Common Sense for California - The Common Sense Act of 2010

California has three initiatives filed to legalize marijuana - Examiner.com | 10 Aug 09
Marijuana legalization and California initiatives - Examiner.com | 8 Aug 09
Comparing California cannabis/marijuana legalization initiatives - Examiner.com | 31 Jul 09
Oaksterdamn U wants to tax marijuana without limit - Examiner.com | 29 Jul 09
Selling out the medical marijuana movement? - Examiner.com | 24 Jul 09
Tax Prozac not medical marijuana - Examiner.com | 20 Jul 09
Medical marijuana and pizza - Examiner.com | 19 Jul 09


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Author
J. Craig Canada is an Examiner from San Francisco. You can see J. Craig's articles at: "http://www.Examiner.com/x-14883-Santa-Cruz-County-Drug-Policy-Examiner"

Oakland Approves Nation's First Cannabis Business Tax Last night's landslide victory for Oakland's cannabis business tax, Measure F, by 79.9% mirrors

Oakland Approves Nation's First Cannabis Business Tax
Last night's landslide victory for Oakland's cannabis business tax,
Measure F, by 79.9% mirrors the historic 79.6% victory of San
Francisco's path-breaking medical marijuana initiative, Prop. P, in
1991. Like Prop P, Measure F seems destined to serve as a model for
cannabis reform elsewhere in the state and country.
Measure F would impose a 1.8% tax on the city's medical cannabis
businesses, raising an estimated $300,000 for the city.
Kudos to James Anthony for having proposed and authored this
measure; to Rebecca Kaplan for having shepherded it through City
Council; and to medical cannabis collective directors Steve
DeAngelo, Richard Lee, and Keith Stephenson for their enlightened
support of this landmark measure.
Thanks too to the voters of Oakland, who approved Measure Z to "tax
and regulate" marijuana in 2004 and have kept their city on the
forefront of cannabis law reform.
- Dale Gieringer, Cal NORML

http://www.csmonitor.com/2009/0722/p02s07-ussc.html
Christian Science Monitor, Jul 22, 2009
Oakland voters approve marijuana tax
It is the first US city to assess such a tax, which could raise
almost $300,000 in revenue next year. Opponents of the measure say it
opens the door to more crime and heavier drug use.
LOS ANGELES - Oakland, Calif., on Tuesday became the first city in
the US to assess a tax on marijuana.
State and national advocates of the tax say the victory is a
significant turning point in the history of cannabis use, paving the
way for taxation in other communities and states and establishing
more social acceptance of marijuana use.
Opponents say an irreversible threshold has been crossed, opening
the door to more crime and heavier drug use.
By a wide margin of 80 percent to 20 percent, Oakland voters
said "yes" to Measure F, which asked: "Shall City of Oakland's
business tax, which currently imposes a tax rate of $1.20 per $1,000
on 'cannabis business' gross receipts, be amended to establish a new
tax rate of $18 per $1,000 of gross receipts?"
"The voters of Oakland have sent a message to the nation that
cannabis is better treated as a legitimate, tax-paying business than
as a cause of crime and futile law-enforcement expenditures," says
Dale Gieringer, California state coordinator for the National
Organization for the Reform of Marijuana Laws.
The city estimates that the measure will raise $294,000 in
additional tax revenue in 2010 and more in future years. Some say the
measure will provide funds to help offset the city's current $83
million deficit as well as allow police to direct their limited
resources to more serious crimes and drug offenses.
"The public is more interested in having money to preserve social
services and fight more important crimes," says Sam Singer, a
Berkeley resident and well-known PR consultant.
Mr. Singer and others say that since the passage of Proposition 218
in 1996 - which made marijuana available by prescription to relieve
pain and nausea - marijuana use in California has existed behind a
"false front": Users can go to a doctor, complain of symptoms, and
for about $100, get the doctor to write them a prescription for the
drug. A state-issued card lasts for one year.
"It's so easy to get a card that it's almost as if physicians will
help lead you to your story of chronic pain, insomnia, fatigue,
etc.," says John Diaz, editorial page editor of the San Francisco
Chronicle.
Oakland has not so much cleared up the marijuana issue so much as
found a way to contain it, Mr. Diaz says. The city is giving permits
to only four clubs, compared with a few dozen in San Francisco and
about 800 in Los Angeles.
Federal law still prohibits the use and sale of marijuana,
although US Attorney General Eric Holder has said that federal law
enforcement will no longer conduct raids in the states that have
legalized medical-marijuana use. Nationwide, about 775,000 people
were arrested for marijuana possession in 2007.
"It takes a lot of time, attention, and money to bust, prosecute,
and then incarcerate marijuana users," Singer says. "Given the
economy, this is a move that will be welcomed not just in Oakland,
but most likely in major urban cities across the nation."
Some residents in nearby communities are not happy with the Oakland vote.
"I am happy to forfeit the tax money and keep it illegal," says
Trygve Mikkelsen, a Norwegian immigrant living on the
Berkeley-Oakland border. The owner of a wine-rack business, Mr.
Mikkelsen worked on the San Francisco waterfront in the 1970s and
'80s around some people who used cannabis every day. "I preferred not
to work next to them, preferred to have conversations with other
individuals since they were affected by the drug," he says.
The father of three is convinced that younger people will have more
access to marijuana. "I prefer that it is difficult to get a hold of
and an illegal substance," he says.