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San Jose City Council members push to pursue Medical Marijuana “tax cheats”

by dave on September 12, 2012

Below is an email response to the memo written by City of San Jose Councilmember Sam Liccardo, Councilmember Pierluigi Oliverio, and Councilmember Rose Herrera, as well as this article publish by the San Jose Mercury News dated 9/10/12.

SUBJECT: Re: San Jose Rules Agenda Item G.4. – “Amendment of Title 4 of the Municipal Code to Provide for Revocation and Injunctive Relief for Nonpayment of City Fees or Taxes”


From: Dave Hodges
Sent: Wed, Sep 12, 2012 at 8:08 AM

To: Pierluigi Oliverio, Rose Herrera, Sam Liccardo, Chuck Reed, Madison Nguyen, Pete Constant
Cc: Richard Doyle, City Clerk

Dear Rules Committee,
Honorable Mayor Reed,
Councilmember Sam Liccardo,
Councilmember Pierluigi Oliverio, and
Councilmember Rose Herrera,
 
A modification of Title 4 (Measure U) to enforce tax collection is unnecessary. As of August 7th, 2012 A2C2 and several other collectives in San Jose have received enforcement letters regarding our “zero dollar” MBT filings. A2C2 is currently exhausting our administrative remedies before we can re-open our lawsuit against the city. This process must be followed by the City as supported by our Court of Appeals ruling against the city (SJCBC v. HORWEDEL, No. H036369., November 30, 2011.).

If you wish to improve tax collection of the Measure U tax please consider modifying it to include the activities of true collectives who define their activities other than the current narrowly defined “sale, exchange, or barter”. If this modification was made the city would have the ability to tax all collectives regardless of how they define what they do. Expanding the definition of “gross receipts” beyond “sales” would also allow the city to avoid the lawsuits that will arise from enforcement based on the current definition.

If Measure U is modified it should include language that addresses the taxing of contributions. The modifications to Measure U I would suggest is changing the terms: “Price” to “Value” and, “Sales” to “Sales or Contributions” as well as defining the term “Contribution”.

The definition of “Contribution” should be something such as: “Contribution” means and includes any contribution in-kind, monetary and property contributions or any allocation, allotment, appointment, apportionment, appropriation, consignment, distribution, donation, transaction, transfer OR any other term used not defined as a “sale”.

I cannot speak for all the collectives in San Jose who are not paying the Measure U tax. Some may be struggling to pay basic bills such as rent, others may be opposed to paying a tax that states “Payment of Tax Does Not Authorize Unlawful Business” as the city still considers all medical cannabis businesses to be “Unlawful”.

In the case of A2C2, we were structured to be a true collective in strict compliance with state law and in full compliance with both the city of San Jose’s Title 6.88 and Title 4.66. A2C2 does not engage in activities that fall under the cities definition of “Sale” or “Gross receipts”. In Measure U “Sale” means and includes “any sale, exchange, or barter”. These activities violate both state and federal law.

Proof the city attorneys are aware of this is provided by the draft Title 6 Ordinance, under “Collective Operations”, subsections C & D: Section C) states “No sale of any products, including medical marijuana and products containing medical marijuana, shall be allowed…” While section D) states “In-kind contributions, monetary contributions and property contributions provided by members towards the collective’s overhead expenses shall be in strict compliance with State law…”

The only activity that happens at A2C2 is members contributing to the collectives overhead expenses and the collective allocating cannabis to its members based on their contribution. These activities are defined in our membership agreement and are acknowledged by each member every time they sign in & enter the collective.

Please understand it is not the intent of myself or any member of A2C2 to avoid taxation. The goal of A2C2 is to serve its members in strict compliance with both state and local laws.

Best Regards,
Dave Hodges
Founder
A2C2 – the All American Cannabis Club
SJCBC- the San Jose Cannabis Buyers Collective

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