Federal government could stop Washington state pot tax

By KTTH | May 12, 2014

The federal government has the opportunity to prevent Washington from collecting taxes on the sale of recreational marijuana.

A lawsuit filed recently in federal court in Seattle challenges the state’s right to collect taxes from a Bellingham medical marijuana dispensary owner, and could have far reaching implications.

Dispensary owner Martin Nickerson owes the state $62,000 in taxes on his product, but at the same time is being prosecuted for illicit marijuana distribution. If Nickerson pays the tax, he would essentially be admitting guilt, says his attorney, Douglas Hiatt.

Hiatt says the suit is over Nickerson’s constitutional right not to implicate himself in a crime, but could have the effect of preventing the state from collecting tax on any recreational pot.

Hiatt’s suit specifically asks the federal government to make a decision on whether state law conflicts with the federal prohibition on marijuana.

Exploring the issue, host Ben Shapiro did not side with Hiatt or Nickerson, saying that the state should have the right to collect whatever tax it wants – that is, if voters approved it – without federal meddling.

“The federal government has no business getting involved in this,” Shapiro said. “The issue is less about marijuana, more about the encroachment of the federal government. If we’re stupid enough to vote for huge taxes [then we should pay them].

“I’m for legalization and heavy regulation – but this silly idea that the federal government is going to be jumping into the marijuana trade and now there’s a conflict between the state and the federal government, it just demonstrates how far the federal government has gone.”

State tax officials have expressed confidence that they’ll still be able to tax recreational pot.

Alison Holcomb, the attorney who wrote the state recreational marijuana law, does not think that the federal government will rule in Hiatt’s favor. That’s because, she told the Tacoma News-Tribune, the state has a general tax on marijuana, not just specifically on Nickerson’s marijuana.

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