As many of you know by now, on January 18, 2018, the Michigan Department of Treasury issued REVENUE ADMINISTRATIVE BULLETIN 2018-2. This document spells out the State’s tax policy regarding new commercial cannabis businesses, patients and caregivers.
Among the conclusions Treasury officials reached and published in that document was the determination by the Department that the implementation of a 6% use tax applied to the price patients pay their caregivers for medical cannabis products was the proper policy. Below is the rationale the Department used to justify this new PATIENT TAX.
The GSTA and UTA exempt the “sale of drugs for human use that can only be legally
dispensed by prescription.” However, this exemption does not apply to the sale, use,
storage, or consumption of marihuana or marihuana-derived products because at the time
of the sale they are not dispensed pursuant to a prescription. Rather, a qualifying patient
presents a registry identification card indicating that a physician has certified that the
patient has a debilitating medical condition.
Essentially, the Treasury Department is saying that because medical cannabis is “recommended” and not “prescribed”, transfers between patients and caregivers are subject to a 6% use tax to be paid by the purchasing patient. They expect patients to add up all their purchases during the course of the year, multiply the total amount they paid their caregiver by 6%, and claim that total on your annual state income tax return.
Well that’s all fine and dandy for the state, but it sucks for patients! And did you even know about this change? Probably not. The Treasury Department didn’t send any announcement of this policy change to patients. The State’s Licensing And Regulatory Affairs (LARA) and the Bureau of Medical Marihuana Regulation (BMMR) failed to issue any new tax policy notification to patients. How were the 300,000 patients who participate in the program supposed to find out about this new tax policy?
There are a lot of questions for policy makers in this state regarding the creation and implementation of this new 6% PATIENT TAX, sadly they don’t feel the need to respond to patient questions. So to make sure that Michigan’s medical cannabis patients are heard on this issue, we have created an email campaign that will assist patients with sending an email to their state legislators and the Director of the Treasury about this important issue.
Next Monday, February 12, 2018, Michigan NORML will begin a campaign to REPEAL THE 6% PATIENT TAX, and we could sure use your help! The only way our legislators will even consider changing this policy is if we, patients and caregivers, flood their offices with calls and emails. Watch for our ACTION ALERTS about this issue and please take 5 minutes to send emails to your legislators and Treasury Director Nick Khouri. We can provide the tools to help you, but it’s really important now that you start helping yourself now. Please send the emails and make the calls, otherwise good people will face tax evasion charges because of this predatory tax policy.
On Tuesday, February 6, the House Judiciary Committee will hold a public hearing on HB 4158, a bill that would require a criminal conviction before members of law enforcement could seize, keep and/or liquidate property siezed in connection with an alleged crime.
I’ve been in contact with the sponsor of this bill, Rep. Peter Lucido, and he is seeking people who have had their property seized by overzealous members of law enforcement. He would especially like to hear from people who have had assets forfeited and who were never charged with any crime!
Rep. Lucido’s bill bans seizures where the victim was never charged with any crime and forces cops and prosecutors to obtain a conviction before they can keep a person’s possessions.
If you have been an asset forfeiture victim and you would like to tell our legislators your story, please contact me at firstname.lastname@example.org, or drop a comment below.
Thanks folks, and stay safe!!!
On Friday, January 26, 2018, the Secretary of State issued the statement below with regard to the Campaign to Regulate Marijuana Like Alcohol. This statement indicates that an initial review of our petition forms and signatures has passed muster and will be permitted to continue. This statement also provides that, “the deadline to submit challenges to this petition will elapse at 5:00 p.m. on February 9, 2018”.
What that means is, the proposal looks good so far, the Secretary of State has reviewed some of our forms and signatures, and now our opponents have until February 9, 2018, to challenge our proposal in court. That’s how the process works.
We don’t have any reliable information that any specific person or group plans to challenge our petition in court, but it wouldn’t be surprising. The Michigan Responsibility Council, which calls itself “Michigan’s premier cannabis association committed to educating, promoting and advancing the study of legitimate use of cannabis health care”, is funding an opposition group called The Committee to Keep Pot Out of Neighborhoods and Schools, and Scott Greenlee, President of Healthy and Productive Michigan, who is quoted in Metro Times as saying, “If an individual were on a street having one marijuana cigarette, those folks are just not arrested.” You can read more about Greenlee’s group here.
I don’t know if these people are naive or just plain mean-spirited, but they are wrong with their alternative-facts, they are wrong morally, but they have access to money and we shouldn’t underestimate what they might be capable of doing.
Here is the original pdf document.
January 26, 2018
An initiative petition proposing to authorize the personal possession and use of marihuana by individuals aged 21 years and older and control the commercial production and distribution of marihuana, was filed with the Secretary of State on November 20, 2017 by the Coalition to Regulate Marihuana Like Alcohol.
The Board of State Canvassers has established a uniform deadline for challenging signatures sampled from an initiative, constitutional amendment or referendum petition to elapse at 5:00 p.m. on the 10th business day after copies of the sampled signatures are made available to the public. (See minutes of November 8, 2013 meeting of the Board of State Canvassers.)
Please be advised that copies of the signatures sampled from this initiative petition were made available for release to the public on January 25, 2018. Therefore, the deadline to submit challenges to this petition will elapse at 5:00 p.m. on February 9, 2018.
Please contact the Bureau of Elections at (517) 373-2540 if you wish to purchase a copy of the sampled signatures for the petition.
Today, Michigan NORML sent a letter to all 110 members of the Michigan House of Representatives, and all 38 members of the Michigan Senate, expressing our concerns with the policy change outlined in the Department of Treasury Revenue Administrative Bulletin 2018-2. This new policy is a 180 degree turn from the policy issued 10 years ago by then Director of the Treasury, Glenn R. White, a document that has provided fair and equitable tax guidance to patients and caregivers.
Here are copies of the letter we sent today, and a copy of the past and current policy documents issued by the Michigan Department of Treasury.
As some of you may be aware by now, last Thursday, January 18, 2018, the Michigan Department of Treasury quietly issued a new policy directive stating that all transactions between a patient and the caregiver he or she is connected to through the MMMP registry, are subject to 6% Use Tax to be paid by the patient! That report is real and several Michigan NORML board members are aggressively seeking to rectify this horrifying change of policy.
First, we have coined this new tax, the PATIENT TAX, because it only applies to patients and we believe that terminology will resonate with the public. We are working with a large media outlet to produce an Op-Ed piece to help publicize this issue. We have reached out to our national partners for consultation and assistance, and we are steadfastly engaging legislators demanding that they act to correct this travesty.
YES. On January 18, 2018, the Michigan Department of Treasury issued Revenue Administrative Bulletin 2018-2. (document attached) That document outlines new tax policy for cannabis businesses, patients and caregivers. One of the conclusions on this report states;…a qualifying patient that receives marihuana from a primary caregiver is liable for use tax at a rate of 6% of the “purchase price” of the marihuana. Use tax should be remitted and reported annually on the qualifying patient’s Michigan Individual Income Tax Return (Form MI-1040).
They make their intent clear by providing this example;
Example 2. Carrie is a caregiver under the MMMA. Carrie provides marihuana in exchange for $100. Carrie is not liable for sales tax on the $100 since sales by caregivers under the MMMA are a non-taxable service. However, Paul is liable for use tax based on the purchase price of the marihuana. Paul should report and remit $6 in use tax for the use and consumption of this property on line 23 of his Michigan Individual Income Tax Return (MI-1040).
NO. This administrative change is not retroactive.
MAYBE. This change is so new, nobody knows with any certainty exactly what it means just yet, but if this policy remains in place, then yes, patients would be required to remit a 6% use tax to the State when they file their annual income tax returns.
NO. Not directly according to this bulletin that also addresses a caregiver’s tax obligation. It states;
A registered primary caregiver under the MMMA “may receive compensation for costs associated with assisting a registered qualifying patient in the medical use of marihuana. Any such compensation does not constitute the sale of controlled substances.” Therefore, primary caregiver provision of marihuana and marihuana derived products in compliance with the MMMA is a non-taxable service and not subject to sales or use tax.
Please refer to the example above where Paul is a patient and Carrie is a caregiver.
You probably have more questions, but at this point, any answer we give would be purely speculation. Please be patient and be prepared to act when we issue an action alert.
Just so you know, we have offered a specific legislative solution to legislators who care about our issue and who are just as appalled by this travesty as we are. We are confident they will ultimately understand the urgent need to act and correct this gross miscarriage of tax authority. We are also discussing legal strategies in case this ends up going that far, but whatever happens, we won’t surrender on this issue and we’re going to need everybody’s help when the time to act arrives! Please be ready!
Michigan NORML Director of Social Media
You may have noticed that our website is undergoing some changes. Over the next 30 day, our website will be transformed into one of the most powerful and useful advocacy tools we have!
EDIT 1/26/18 added image below.