Why one Alabama county wants to add a 15% tax on medical marijuana

More than three years after Alabama lawmakers approved medical marijuana, no dispensaries are open. No products have been sold. And not a cent of tax revenue was generated from it.

But at least one county, which like other counties doesn’t even know whether it will eventually get a dispensary, wants to commit to generating more revenue from medical marijuana sales than previously allowed — whenever sales begin. The entire program is subject to litigation over complaints about how the license was issued, and there is no timetable for when these concerns may be resolved.

Voters in northern Alabama’s Cullman County will decide on November 5 in a local referendum on whether to apply a countywide 15% sales tax on gross receipts from the sale of medical marijuana products at future dispensaries. The proceeds – which have no estimate – will be split 67% to the Cullman County Attorney’s Office and 33% to the county’s legislative delegation. The delegation will then use these earnings, at their discretion, to address mental health issues.

Details of the referendum will be the subject of a town hall meeting Tuesday at 2 p.m. in the Bayley Center at Wallace State Community College in Cullman.

“We sat down and talked to the district attorney about additional funding and the issue was brought up,” said state Rep. Corey Harbison, R-Good Hope. “We said we wouldn’t get involved, but if people vote on it, they will have the final say. I don’t mind putting the government in the hands of the people. It depends on what the citizens choose.”

Republican Cullman County District Attorney Champ Crocker, who took office in January 2023, said he approached the legislative delegation more than a year ago about the sales tax to help fund his office as it struggles with backlogs of cases. Crocker said he did not support the measure.

“We don’t know what it’s going to cause,” Crocker said. “It’s something new. It began with an informational discussion with the legislative delegation. We talked about how to get funding for what we needed to do for this office. That’s what came out of that discussion.”

Statewide attention

The referendum result will be watched across Alabama and has raised concerns among the sponsor of the 2021 medical marijuana legislation, retired state Rep. Mike Ball of Madison. Ball said he believes the referendum, if approved, would raise the cost of legal medicine. He said it too There is still confusion in Alabama about the differences between medical marijuana – which is allowed and will be regulated and taxed by the state – and recreational marijuana, which is illegal.

“If we add another tax, it’s just going to raise costs for patients who really need it,” Ball said. “I hope people who vote for this decision understand that this is not about providing marijuana to people who want to get high. I don’t think it will be a huge cash cow. “I can sympathize with what (district attorneys) are facing, but the Legislature, the counties and the state… need to find a way to adequately fund district attorneys’ offices.”

He added: “This is not the place for such activities, especially since we don’t even know how much revenue it will generate.”

No county or city has imposed an additional sales tax on medical marijuana products since Alabama Gov. Kay Ivey signed the 102-page bill into law in May 2021. Cullman County’s tax would be in addition to the 9% gross receipts tax included in the legislation primary and used to sell medical marijuana.

In addition, companies associated with the industry in Alabama would pay an annual fee or privilege tax. The minimum privilege tax is $100 and the maximum is $15,000.

“I know a lot of counties will probably be watching this vote,” said Sonny Brasfield, executive director of the Association of County Commissions of Alabama, who said Alabama has few local laws ensuring district attorneys are fully funded in individual counties. on a district basis. Since the pandemic, district attorneys across the state have expressed concerns about a lack of resources to address the backlog of court cases.

Taxation

The additional sales tax could make Cullman County one of the most expensive in the country to purchase medical marijuana where it is legal. Alabama is one of 38 states to legalize marijuana – which is a Schedule 1 drug, illegal at the federal level – for medical purposes.

Most medical marijuana states charge an additional sales tax or excise tax, but almost all of them are lower than Alabama. Some states, such as Florida and Iowa, impose a sales tax rate only on medical marijuana purchases.

In states where recreational marijuana is allowed, the tax rate on medical marijuana is much lower. In Colorado, the first state to legalize recreational marijuana, the sales tax rate for recreational marijuana is 15%, while for medical purchases it is only 2.9%.

Alabama does not allow recreational marijuana, which is legal in 24 states but none of them are within driving distance of the state. Florida voters, however, will decide whether the Sunshine State should be the first in the South to legalize recreational marijuana on Nov. 5 through a constitutional amendment requiring 60% support.

Harbison said the Nov. 5 referendum will cover both medical and recreational marijuana, although he acknowledges that Alabama is a long way from legalizing recreational marijuana.

“This taxes the sale of cannabis products, period,” Harbinson said. “This does not exclude medical marijuana. I think we’re a long way from Alabama becoming a recreational area. But if it comes into force, it will be taxed.”

Prosecutors, mental health

At issue in Cullman County is whether medical products should be used to fund the offices of district attorneys, many of whom opposed legislation establishing Alabama’s medical marijuana program in 2021. Crocker was elected to his position two years after the medical marijuana ballot measure in Legislature.

Crocker said the backlog of criminal cases in Cullman County is at least eight years old.

“We have inherited a backlog of 20 murder cases and have not solved any of them in the last year and a half, and just two months ago we started a 2017 murder case,” he said. “I will mention that Cullman County is one of the fastest growing areas in Alabama. Because of this, we are already seeing more people and more cases here.”

Cullman County, with a population of over 92,000, consistently ranks among the 10 fastest-growing counties in Alabama.

Crocker said state funding for his office is inadequate, a common complaint from district attorneys across Alabama. Funding shortages have forced local governments to open their wallets to support prosecutors. In the mobile version, e.g. The City Council approved a three-year agreement last year to spend $1.5 million — or $500,000 a year — to pay prosecutors to help reduce the case backlog.

“We have about the same (deputy district attorneys) in my office that we had about 20 to 30 years ago,” Crocker said. “I would like to have three to four more ADAs. If we can increase our staff, we will be able to move faster, which will be better for the victim and victims of crime. It is also better for the cases of those accused of committing crimes who are in prison to be solved. It’s also good for law enforcement. They work every day and deliver these cases to us.”

Crocker said the longer a case goes unsolved, the more likely it is to become weaker.

“If it takes five to six years to resolve the case, it only weakens it,” Crocker said. “Memories fade. We want to transfer cases faster.”

The second part of the ballot initiative is funding for mental health services, which will be decided by the local delegation.

Chris Van Dyke, Chief Operating Officer at WellStone, Inc. – with plants in Huntsville and Cullman – said that if the referendum is approved, “there will definitely be a lot of need.” He said WellStone has a “neutral” stance on the referendum.

“We would like to see crisis services expanded,” Van Dyke said. “We’re doing a major expansion in Huntsville and we can (send) people to Huntsville, but in the long run we’d like to have a crisis center here that’s more local. Housing is also a problem. “A lot of people are homeless or have difficulty housing because housing is not as affordable.”

Stream condition

The referendum attracted little attention in Cullman County and sparked no campaign. The Alabama Medical Cannabis CommissionThe state regulatory agency for the program does not influence local tax referenda, according to spokeswoman Brittany Peters.

The entire program is in constant flux due to court proceedings that have halted its implementation and concerns about the selection process.

Alabama was initially scheduled to launch a medical marijuana program in the fall of 2022, although the commission spent much of this year developing a framework for regulating and operating the program.

The Montgomery Country judge appointed retired District Judge Eugene Reese serve as a mediator in long-running issues over who will receive licenses to grow and sell medical marijuana in Alabama.

Under Alabama’s 2021 law, the commission can award up to 12 grower licenses, four processor licenses, four dispensary licenses and five integrated facility licenses. In late 2022, the Commission announced that it had received a total of 94 applications from companies seeking licenses to grow, process, transport, test and dispense medical cannabis products.

The companies denied licenses, accusing the commission of violating state law and administrative regulations in selecting winners. Since 2022, the commission has attempted to grant licenses three times and canceled them twice due to concerns about the selection process.

Ball, the sponsor of the 2021 legislation, expressed hope that the mediator would clear up the concerns and that the program could finally begin.

“I think the judge wants the case to proceed,” he said.