A drafting mistake in the recently approved Proposition 64 could save California cannabis patients a few dollars next year while losing the state government hundreds of millions of dollars. While California was counting on an increase of marijuana tax revenue after ratifying the marijuana legalization measure, failure to specify a date in a crucial passage of the bill means that the state will collect virtually nothing in marijuana sales tax until the end of 2017, as reported by The Washington Post.
Proposition 64 aims to establish two different sets of taxation for recreational and medical marijuana. Beginning January 1, 2018, both commodities will be hit with a 15 percent excise tax. While recreational cannabis will carry the additional state sales tax of 7.5 percent, medical marijuana patients are being spared the sales tax in an effort to keep medical cannabis affordable.
The only problem is that someone on the drafting team of Proposition 64 forgot to mention the specific date that medical marijuana would cease carrying a sales tax. That was supposed to occur on the first day of 2018, the same day the excise tax will be imposed. But since no date was listed, medical marijuana’s exemption from the sales tax is effective immediately.
That means that there will be no sales tax on marijuana in California until the end of next year. Though there is some precedent for overlooking obvious clerical errors in the wording of laws, California’s Board of Equalization has chosen to be sticklers and ruled that the mistake is now legally binding.
Medical marijuana sales totaled $2.7 billion in 2015. If 2017 is on par (and it will almost definitely exceed that amount) a 7.5 percent sales tax would net over $200 million in taxes. But what does the state need a couple hundred million dollars for?
That sounds pretty bad for those in the government who like tax dollars, but apparently this kind of thing isn’t all that rare. “It’s very easy to get a detail wrong in a long, complex document,” Pat Oglesby, a cannabis tax policy expert at the Center for New Revenue, told the Post. “I made a more expensive mistake as a staffer on the Joint Congressional Committee on Taxation.”
Marijuana tax in California may suffer some setbacks even after sales taxes return in 2018. Marijuana users in the Golden State may not be too taken with the 22.5 percent tax that will come with recreational marijuana and take the next 14 months to acquire a medical recommendation card if they don’t have one already.
Washington state experienced a similar problem and chose to dismantle the medical marijuana system entirely to force users to pay exorbitant taxes.
Photo via Flickr user Images Money