Schwarzenegger wants marijuana money

Apr 9, 2007, 19:20 GMT

Sacramento - California governor Arnold Schwarzenegger has his eyes on the marijuana of his citizens.

The State Board of Equalization, which is the state's main tax authority, has alerted California's 150 to 200 medical marijuana dispensaries that they are liable to pay taxes on their sales, the Sacramento Bee reported Monday.

'If you sell medical marijuana, your sales in California are generally subject to tax and you are required to hold a seller's permit,' the board said in notices sent out in February. 'If you do not obtain a seller's permit or fail to report and pay the taxes due, you will be subject to interest and penalty charges.'

The notice marks the first demand for marijuana taxes since California voters legalized medical marijuana in 1996 by passing Proposition 215 - in defiance of federal law.

The substance remains illegal under federal law even though 12 states have legalized use of the narcotic for medical treatment. The latest was New Mexico which passed its own medical marijuana bill last week.

Medicines are tax exempt in California, but tax authorities decided to start the marijuana levy because it is not dispensed by a pharmacist or approved by the Food and Drug Administration as a medication.

While some medical marijuana advocates support the tax for legitimizing their activity, others are concerned that the tax records could give federal authorities detailed records for possible prosecution follow-up.

Ryan Landers, a spokesman for Sacramento-area medical marijuana retailers and one of the original proponents of Proposition 215, supported the move.

'We've worked hard to make sure the (marijuana) clubs act like a good neighbour,' he said. 'We think if you pay your taxes, you're going to be looked upon a lot different(ly).'