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Friday , 17 November 2017
Does Marijuana Taxation Violate The Fifth Amendment?

Does Marijuana Taxation Violate The Fifth Amendment?

Marijuana taxation will be upheld by the State of Colorado despite claims that paying it amounts to self-incrimination which violates the Fifth Amendment.

Last week, marijuana activists lost the initial bid to eradicate Colorado’s current recreational marijuana tax structure. But the debate is far from over.

Activists assert that marijuana taxation should be outlawed, and argue that in paying taxes, people are acknowledging to the government that they are violating federal law which causes businesses and consumers to implicate themselves in federal crimes.

After a daylong hearing at the Denver District Court, Judge John Madden ruled that there is no evidence that federal prosecutors are targeting marijuana store owners or consumers based on tax payments. Moreover, Madden said that because none of the testifying plaintiffs were owners of a recreational marijuana dispensary there was not enough evidence to justify the injunction.

The Plaintiff’s attorney, Rob Corry, says that’s exactly the trouble. As the current laws stand, getting witnesses to testify against taxation means incriminating oneself, and paying taxes means you admit to the government that you are breaking federal law.

Although the plaintiffs didn’t get the injunction, the lawsuit challenging the taxes will rage on.
Activists assert that state and local governments cannot collect taxes on activity that is federally illegal. By those standards, marijuana taxation is illegal.

This isn’t to say that marijuana activists don’t want to pay up. Activists’ attorney Rob Corry helped draft Amendment-64. A-64 prohibits any regulation that is ‘unreasonably impracticable’ and states that marijuana should be taxed “in a manner similar to alcohol.”

Currently, shoppers at recreational marijuana stores pay 12.9% in general and special state sales taxes, as well as a 15% excise tax that is applied at the wholesale level, bringing the sum total tax to 27.9%. Medical marijuana only pays the 2.9% tax. Activists assert that these taxes are so high that it makes it impracticable to run a reasonable marijuana business.

Amendment 64 set out to end prohibition, and transform the unregulated black market trade in Colorado to a legitimate tax paying market. But Corry argues these high taxes on recreational marijuana are counterproductive because they empower buyers to seek out the black market for better pot prices.

The outcome of this case could take months to resolve as it dredges up issues that will continue to arise between State and Federal law as long as the Feds continue to categorize marijuana as an illegal controlled substance. With the acceptance of marijuana currently gaining widespread momentum, it’s high time the feds jump on.

About Michaela Magaraci

Michaela Magaraci

Michaela Magaraci is a Denver local, musician, writer, cannabis enthusiast, and contributor to Marijuana Connect.