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A legal snafu made medical marijuana tax-free in California for 2017

medical marijuana

medical marijuana

Californians, break out your rolling papers.

California joined three other states in legalizing recreational marijuana on Election Day. But an oversight in the text of the ballot measure gives medical marijuana patients a tax break well before the January 1, 2018, target.

The legal loophole made medical weed tax-free effective immediately and through the entirety of 2017.

A spokesperson for the campaign tells Business Insider they intend to work hard to ensure the bill is properly implemented.

Keith Humphreys, a professor of psychology at Stanford University, writes for The Washington Post that the marijuana-initiative “blunder” could cost the state millions of dollars in tax revenue.

Proposition 64 allows adults over the age of 21 to use, possess, and transport up to an ounce of marijuana for non-medical purposes, and grow as many as six plants at home. The bill also imposes a 15% excise tax on sales of the drug, generating up to $1 billion in new tax revenue annually, according to the state’s nonpartisan Legislative Analyst’s Office.

The bill peels away the state’s 7.5% sales tax tacked on top of medical pot. Lawmakers wanted patients suffering from serious and legitimate conditions to continue to afford their medicine.

However, The Washington Post and The San Francisco Chronicle report that the bill aimed to lift the sales tax starting in 2018, when the state begins issuing licenses to dispensaries to sell recreational marijuana. Because the target date was “omitted in the relevant subsection of the 62-page initiative,” the tax break came early for Californians carrying a medical ID.

A member of the State Board of Equalization, which ruled to uphold the text of the bill, told The San Francisco Chronicle that California could miss out on as much as $49.5 million in 2017.

The creators of the bill have said the tax holiday was never their intention.

Jason Kinney, a spokesperson for Proposition 64, wrote in an email to Business Insider that the initiative was a “comprehensive, carefully-drafted measure with broad public support.” The campaign intends to remedy the issues around its interpretation.

“The whole point of the sales tax exemption for medical patients was to strike a balance between keeping medical [marijuana] affordable after the new excise tax was in effect …,” Jason Kinney, a spokesperson for the Proposition 64 campaign, said.

“Obviously, we strongly disagree with any interpretation of the measure that comes to the bizarre conclusion that medical [pot] patients are somehow immediately exempt from the state sales and use tax — before the excise tax takes effect,” Kinney continued.

There are currently 6,000 California residents with state-issued medical marijuana ID cards. Dispensaries across the state have been urging users to renew their cards or acquire ones for the first time to help make the drug affordable to them, according to The Chronicle.

Business Insider

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