Is it fair to tax medical marijuana?
N.J. state law exempts prescription and over-the-counter drugs
Chris Goldstein smoked his first joint in 1994 and has been working to legalize marijuana ever since. He serves on the Board of Directors at PhillyNORML and has been covering cannabis news for over a decade. This is his second Philly420 column for Philly.com.
The Garden State is abuzz with reports of a new taxable cash crop: medical marijuana.
The Christie administration this week announced that medical marijuana will be taxed at 7 percent, just like any other consumer product.
There’s only one location right now where you might be able to pay that tax. And that’s at a dispensary in Montclair.
A non-profit called Greenleaf Compassion LLC has the monopoly as the state’s only fully approved Alternative Treatment Center.
Although it’s been three years since then-Gov. Corzine signed the bill legalizing marijuana for medical use, Greenleaf’s Montclair dispensary, which was given the OK in October to open for business, has yet to open its doors.
There will be no legal way around the tax, even though there was nothing about a tax in the original law. And conveniently for the state, patients eligible to consume medicinal marijuana are not allowed to grow their own.
Ken Wolski, a registered nurse and the executive director at The Coalition for Medical Marijuana New Jersey (CMMNJ) emailed me about the issue yesterday.
"Neither the N.J. compassionate use law nor the regulations to enact the law call for such a tax," said Wolski. "In fact, the New Jersey Division of Taxation's Technical Bulletin issued 2/16/10 clearly notes that, 'Effective October 1, 2005, all drugs for human use, including prescribed drugs and over-the-counter drugs are exempt from sales and use tax.'"
The state doesn’t tax aspirin or antibiotics.
"Prescription drugs are not subject to sales tax in New Jersey,” Wolski said, “and neither should medical marijuana be subject to this tax."
The Inquirer's Jan Hefler has been following some of the N.J. residents who are still waiting for Greenleaf to actually sell them some cannabis.
"The story keeps changing," said Sandra Hacker, a Holland Township, Hunterdon County, resident. "I'm now having serious doubts. I'm in a quandary, at a loss for words. I suffer every day with multiple sclerosis and I am thoroughly disgusted."
The tax issue revealed a bigger conflict. The owners at Greenleaf independently sent a query requesting clarification to the N.J. Treasury. The NJ Department of Health, Medicinal Marijuana Program was expecting the Greenleaf storefront to open earlier this month. Why hasn’t it opened? Greenleaf isn’t saying. They’ve cut off communication with registered patients.
The reality is that most New Jersey residents with HIV, cancer or other qualifying conditions are not registered for medical pot and may already be accessing the underground marijuana market, where, of course, there is no sales tax but there is a massive mark-up.
The street price for marijuana does not reflect the price of production - it is relatively cheap to grow. But the $350-$550 per ounce for cannabis underground is the price of its status as an illegal substance.
Greenleaf has not revealed to patients or the public just how much they will charge for their product. This is, IF they ever sell some.
New Jersey is running the most limited medical marijuana program in the country. Gov. Christie personally went to the mat for several unique restrictions: the active ingredient, THC, must remain under 10 percent, dispensaries may only grow three strains of cannabis, and patients can only buy two ounces per month.
The Newark Star-Ledger Editorial Board pointed out yesterday “lawmakers never even debated a [tax] exemption for marijuana.”
In arguing against a state marijuana tax they concluded: “Need the cash? Decriminalize marijuana, including recreational smoking. Then regulate it and tax the bejeepers out of it.
"But it is just not right to tax a sick person’s medicine.”
Right now decriminalizing marijuana is more meaningful to the tens of thousands of N.J. residents who actually need cannabis for medicine. A decrim bill did pass the N.J. Assembly this summer 41-30 with strong bi-partisan support. A companion bill is currently active in the state senate. Gov. Christie has promised to veto it.
There are almost 20,000 marijuana possession arrests in New Jersey each year. Many of the patients I know with Crohn’s disease, HIV, MS or other conditions have been busted multiple times for small amounts of pot. Penalties even worse for the patients who are caught growing.
Contact Chris Goldstein at email@example.com