California Puts Medical Marijuana Dispensaries in Catch-22 Situation

Pay taxes and/or die

California authorities are notoriously creative when it comes to wringing as much tax revenue as possible out of the state's businesses, yet are leaving real money on the table because of their failure to come up with a simple way for medical marijuana dispensaries to pay their tab.

Voters legalized this business 19 years ago with the passage of Proposition 215. But an uncertain federal legal status has complicated the matter since then. The state only collects a small percentage of the sales-and-use taxes these businesses owe, although a new program is attempting to address the imbalance.

"Because of federal law, people in the cannabis industry aren't allowed to have bank accounts," said George Runner, a Republican member of the Board of Equalization, a state tax-collection agency. "Cash-based businesses are very hard for the BOE to audit. If we can't analyze a bank...

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