Incoming Senate Judiciary chair has medical pot law in his sights

LANSING — Senator-elect Rick Jones (R-Grand Ledge) thinks the legalization of medical marijuana in Michigan has been done in a haphazard manner and needs to have proper oversight and regulation in place to prevent negative outcomes.

In an interview with the Michigan Messenger, Jones identified several areas of concern where he hoped the new legislature might provide some clarity in terms of what the law allows or requires. On the plus side, he pointed out that the new legal reality could provide new revenue for the state.

Under Michigan law, there are two types of people who can possess medical marijuana, the patient and the caregiver. The patients can either grow up to 12 plants at a time in a locked secure facility, or obtain the drug from a caregiver. A caregiver can grow up to 12 plants per patient and is limited to five patients. The same secure growing rules apply.

The law prohibits a care giver from selling the medical marijuana, however, he or she is allowed to charge the costs of growing, preparing and delivering the drug to patients. A thread on the Michigan Medical Marijuana Association website indicates that many care givers have established their costs to be $300 per ounce.

One caregiver wrote on the thread he expected “to clear $18,000 a year” with the $300 per ounce cost recovery. That in turn raises an issue.

Michigan is facing a significant budget shortfall again next fiscal year, estimated at $1.7 billion. As of now, the Michigan Department of Treasury has no guidance on taxation for medical marijuana income for caregivers.

The Denver Post reported in November of this year that taxes on medical marijuana dispensaries had resulted in $2.2 million in tax revenue for local and state government in Colorado. While that is a tiny amount of the budget gap that state faces — estimated at $1.8 billion — it could be an indicator of a new revenue stream for state government.

Jones says extending a sales tax to medical marijuana was not an option. “If it truly is a prescription we don’t tax prescription drugs,” said Jones.

But Jones says the money made by caregivers should be taxed by both the federal and state governments. Currently the Michigan income tax is 4.35 percent, according to the state of Michigan website. The federal income tax rate is between 10 percent and 35 percent depending on the actual income according to moneychimp.com.

The incoming lawmaker also said the income from medical marijuana caregiver activities should also be subject to business taxes just like any pharmaceutical company in the state would be subjected to.

“There’s no need for a specific new law on this. If the generally applicable laws on taxes apply, they apply and should be paid. If not, they don’t,” says Mike Meno, spokesperson for the Marijuana Policy Project in Washington D.C. “It should also be pointed out that you can’t really pay federal taxes on something that the federal government still says is illegal.”

But at the state level, all such activities should already be taxed under existing law, according to Michigan Treasury spokesman Terry Stanton.

“There is no provision in the statute that indicates an exemption to income tax or the MI Business Tax,” Stanton told the Messenger via email. “If profits derived as a licensed grower/provider meet the threshold of being subject to tax, the entity in question would be responsible for filing an MBT or income tax return.”

But Jones says there are several other aspects of medical marijuana legalization that need to be addressed, calling the laws that regulate this exchange far too vague.

“I think the problem is from the way the law is written. It was written by people who want to legalize marijuana,” said Jones, who last Monday was appointed to chair the state Senate Judiciary Committee. “So it was written into a gray area.”

Jones said the gray area law had lead to a “wild, wild west” situation with the implementation. It leaves local governments struggling with issues such as compassion clubs where medical marijuana products can be consumed onsite as well as dispensaries where medical marijuana is transferred from caregiver to patient.

The state has already seen a variety of responses by local governments dealing with the law. Some have banned the growing of marijuana altogether, while others have sought moratoriums while they find ways to regulate the businesses, and others still have done nothing at all. Those new regulations have also lead to a series of lawsuits in state courts.

The three term state representative and former Eaton County Sheriff says that locations that allow consumption onsite are a threat to safety.

“It’s foolish and dangerous,” Jones said. “I would hope we would regulate that.”

“We don’t require patients to take any other medicine only at home, so why force this restriction on medical marijuana patients?” asks Meno. “Michigan’s law does not allow public use or driving under the influence, but if an HIV or MS patient has to travel to a friend or relative’s house, why would we cruelly and unnecessarily forbid them from taking their medicine there? That should be the business of the patient and the home owner. There is no reason the state should get involved and make the already challenging lives of seriously ill patients any more difficult.”