Monday, March 7, 2011

What's Next for Berkeley Patients Group

By David Downs
Mon, Mar 7, 2011 at 2:38 PM

Owners of Berkeley's biggest medical marijuana dispensary, Berkeley Patients Group, are hoping for a settlement behind closed doors on a $6.3 million tax bill. The three-year-old tax case drew fresh headlines recently when the California Board of Equalization issued a press release re-iterating the board's stance on the dispensary’s tax problems. However, Berkeley Patients Group’s operations have not been affected by the tax dispute and the dispensary is not in danger of closing, said spokesman Brad Senesac. The dispensary, in fact, just opened up a new space for patient services.

The dispensary’s tax bill comes from sales of medical cannabis from 2004 to 2007. The board of equalization ruled that medical pot sales were taxable in 2007. Board Chairman Jerome E. Horton said in a February 24 press release that pot sales are retroactively taxable and that Berkeley Patients Group owes for those years.

Stephen DeAngelo, owner of Harborside Health Center in Oakland, the largest medical cannabis dispensary in the West, endured a similar situation. He said the board of equalization told Harborside that pot was not taxable, then later came back and said it was, and Harborside owed $110,000 in back taxes. Harborside paid them.

The board’s decision to slap Berkeley Patients Group with a bill for back taxes stems from a larger movement to collect more taxes from pot clubs, and even street dealers. The board now holds that all weed sales, medical or otherwise, are taxable and the board intends to collect. The board has audited forty clubs, and suspects five hundred out of an estimated eight hundred in the state are not paying sales taxes. Horton has also backed the newly introduced Senate Bill 626, which would tax and regulate pot like tobacco for the first time.

Correction: an earlier version of this story mis-stated the amount Harborside Health Center paid in back taxes to the State Board of Equalization.

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