Court Upholds Colorado Cannabis Tax in Self-Incrimination Suit

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On Friday, Ladybud covered the story of Attorney Robert J. Corry, Jr, who was arguing in a preliminary injunction hearing in Denver’s District Court against the state’s tax on cannabis sales and cannabis businesses. The basis of the lawsuit is the Fifth Amendment, specifically the right against self-incrimination.

The attorney argued that paying those taxes causes consumers and businesses to implicate themselves in a federal crime due to the conflict between state and federal laws. Because cannabis is still illegal on a federal level (and is listed as a Schedule I substance with no recognized medical benefits, no less), anyone participating in a state-legal cannabis transaction, even a medical marijuana transaction, is still in violation of federal law. Recreational cannabis users and businesses are in a very precarious legal situation.

There’s been an update to the story: the court refused to grant the injunction stopping the collection of retail cannabis taxes on Friday, meaning that the taxation program is still in effect in the state of Colorado. However, the lawsuit is not over. The suit will move forward, simply without the immediate impact of an injunction halting the collection of state cannabis taxes. The state taxes, which are nearly 30% on recreational cannabis sales, are considered by many to be far too high (especially when compared with the tax rates for medical marijuana [2.9% sales taxes] and alcohol [subject to sales tax and an excise tax, which more difficult to calculate as the rate is established by volume, not price]). They do also, unquestionably, leave some businesses in a legally precarious position.

While the system in Colorado has many issues and glitches, it has done an excellent job of discrediting many of the scare tactics used by prohibitionists to keep cannabis illegal. It is still true that the regulation system for cannabis is much stricter and more cost-prohibitive than the regulation market for alcohol. Ladybud will continue to follow this and similar stories as the regulation system in Colorado and the one in Washington are established and fine tuned.

For previous Ladybud coverage of tax-related issues, click here!

  Photo Credit: eFile989 under (CC BY-SA 2.0) via Flickr