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Pot tax stuck in House committee

Rep. Steve Farley, seen here during Monday's House Ways and Means Committee, proposes taxing medical marijuana at a rate of 300 percent. The bill was held, as committee members expressed confusion about what sort of impacts such a tax would have. (Photo by Evan Wyloge/Arizona Capitol Times)

Rep. Steve Farley, seen here during Monday

The House Ways and Means Committee on Monday did not to vote on a proposed 300 percent tax on medical marijuana in Arizona, opting instead to further investigate what effects such a tax could have.

The debate over how to tax medical marijuana comes as the state Health Department is still writing the rules over how the program will be implemented later this year. Voters in November passed Proposition 203, making medical marijuana legal in Arizona.

Rep. Steve Farley, the Tucson Democrat who wrote the bill, said his intent was to enact a medical marijuana tax comparable to state taxes levied on cigarettes, which he hoped would help alleviate the state’s crushing budget deficit. Further, the taxes collected would be routed to the recently gutted Medicaid transplant fund.

Opponents of the tax, such as Andrew Myers, head of the Arizona Medical Marijuana Association, argued at the committee hearing that such a premium would undermine the entire medical marijuana program, because it would drive up the cost of acquiring medical-grade pot to levels that would force newly authorized medical marijuana users back to the black market for their weed.

While the committee members all agreed that they do not endorse the use of marijuana – medical or otherwise – they were also receptive to the arguments made by the opponents.

The price of marijuana became a center point of the discussion, with some lawmakers expressing confusion over how some weed can cost as little as $60 per ounce, while medical-grade pot in California costs between $350 and $400 for the same quantity.

Myers, the campaign manager for Proposition 203, said the price disparity is a result of the electric power and quality control measures required to grow medical-grade pot, plus the nondeductible federal business taxes applied to dispensaries and cultivation sites.

But Farley concluded that dispensaries in states with medical marijuana programs already implemented were simply turning an enormous profit on what could be obtained elsewhere for far less.

Myers said the difference in price reflects a vast difference in quality, and that low-grade marijuana cannot be effectively used to treat serious illnesses.

Despite Farley’s ultimate request for a committee vote on the bill, Rep. Jack Harper, a Surprise Republican and the committee chairman, held the bill, explaining there is a need for more education about the way a medical marijuana tax would affect the new state program.

Committee members said that before again considering the bill, they would try to make time to meet with Myers to discuss appropriate taxation rates for medical marijuana.

Farley had proposed an amendment to the bill that would have adjusted the tax rate to only 100 percent, but the amendment was also not voted on.

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