Medical pot shops fight millions in unpaid sales tax

Alison Morrow reports

"Chem Dawg" has a suggested price at Delta 9 collective garden in Seattle, but it's technically not for sale.

"I have never sold marijuana in my life," explained founder Stephanie Viskovich.

At Viskovich's shop, medical marijuana patients donate money to support growers who donate their plants. However, the Department of Revenue considers those donations a business transaction, and recently sent Viskovich a notice.

"For over $1 million in back-taxes," she said.

Viskovich's dispensary is one of an estimated 117 in the state with delinquent sales tax payments. That's about a quarter of the state's 443 registered dispensaries, adding up to about $9.5 million. The DOR admits, however, that their calculations of who owes what are rough estimates.

Martin Nickerson, owner of Northern Cross Collective in Bellingham, has been raided by police and faces felony charges. Yet, he continues to operate, but has to post a Department of Revenue tax warrant on his store front.

"Telling me to shut my doors down or pay the $216,000," he explained.

Nickerson's attorney says, Douglas Hiatt, believes paying those taxes would further incriminate his client.

"Because when you ask someone how much marijuana they sold, they're confessing to a federal crime," he explained. "And what's worse, under federal law, the amount of time you do is controlled by the amount of marijuana you're moving or growing."

Unlike recreational shops, medical marijuana dispensaries aren't licensed to sell. For that reason, many believe the government can't force them to pay sales tax. In doing so, they say, the state is pushing them to admit they're violating the law.

Plus, Viskovich says, one of the businesses in the tax warrant she received is only a name she registered with the state. It hasn't done any business since its inception. The DOR cites industry averages for its estimate.

The murky tax territory may grow clearer this year. In legislation Senator Jeanne Kohl-Welles is drafting for this session, the tax crackdown is clear. The bill reads, "current collective gardens will be phased out" and only those "paying taxes to the Department of Revenue" will have until August 2016 to obtain a license.

"What business operates without paying taxes?" Jeremy Kaufman said. "I'm engaging in the sale of a Schedule 1 narcotic."

Kaufman chose to pay sales tax immediately after opening his dispensary, the CPC, in 2009. He believes refusing to pay sales tax does nothing to protect anyone from the gray area in which they operate.

"When we started, it was really to set that example," Kaufman said. "If you're going to be part of the new cannabis industry, its pay to play."

At least 117 dispensaries appear to disagree, though.

"It's right about $80,000 now," Steve Mohr said.

That's how much his dispensary, Olympia Alternative Medicine, owes according to the DOR. He and others believe if they pay, they forgo their rights as patients and Americans.

"My medical records are private information and don't belong in the hands of the Department of Revenue," Viskovich said.


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