Why an Alabama County Wants to Add a 15% Tax on Medical Marijuana

More than three years after Alabama lawmakers gave the green light to medical marijuana, no dispensaries are open. No products have been sold. And not a cent of tax revenue has been generated from this.

But at least one county, which like other counties doesn’t even know if it will eventually have a dispensary, wants to join in generating more revenue than already allowed from medical marijuana sales, whenever sales begin. The entire program is embroiled in litigation over complaints about how operating licenses have been issued, and there is no timeline for when those concerns might be resolved.

Voters in northern Alabama’s Cullman County will decide Nov. 5 in a local referendum on whether to apply a countywide 15% sales tax on gross profits from medical marijuana products sold at future retail outlets. The revenue gains – for which there are no estimates – would be split 67% to the Cullman County District Attorney’s Office and 33% to the county’s legislative delegation. The delegation will then use those proceeds, at its discretion, on mental health issues.

The details of the referendum will be the topic of a public meeting at 2 p.m. Tuesday inside the Bayley Center at Wallace State Community College in Cullman.

“We sat down and talked to the district attorney about additional funding, and this came up,” said state Rep. Corey Harbison, R-Good Hope. “We said we wouldn’t get involved, but if people vote, they can have the last word. I agree with putting the government in the hands of the people. It is what the citizens choose.”

Republican Cullman County District Attorney Champ Crocker, who took office in January 2023, said he approached the legislative delegation about the sales tax more than a year ago to help fund his office at one point. in which it faces an accumulation of cases. Crocker said he does not support the measure.

“We don’t know what this will generate,” Crocker said. “This is something new. This began with an informative discussion with the legislative delegation. We talked about how we could get the funds to do what we needed to do for this office. “This just came out of that discussion.”

Attention at the state level

The outcome of the referendum will be watched across Alabama and has raised concerns from the sponsor of the 2021 medical marijuana legislation, retired state Rep. Mike Ball of Madison. Ball said he believes the referendum, if passed, would increase the costs of legitimate medications. He also said that There is still confusion in Alabama about the differences between medical marijuana – which is permitted and will be regulated and taxed by the state – versus recreational use of marijuana, which is illegal.

“If you add another tax, it’s just going to increase costs for sick people who really need it,” Ball said. “I hope that the people who vote in favor understand that this is not about bringing marijuana to people who want to get high. I don’t think it’s a great source of income. “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 these district attorney offices.”

He added: “This is not the place to do it, especially when we don’t even know how much revenue it’s going to generate.”

No county or city has imposed additional taxes on sales of medical marijuana products since Alabama Governor Kay Ivey signed the 102-page bill into law in May 2021. Cullman County’s tax would be added to the 9% on gross receipts written in the original legislation and applied to medical marijuana sales.

Additionally, companies involved in the industry in Alabama would pay an annual fee or privilege tax. The minimum privilege tax is set at $100, with the maximum at $15,000.

“I know a lot of counties will probably be watching this vote,” said Sonny Brasfield, executive director of the Alabama Association of County Commissions, who said there are few local laws in Alabama that ensure district attorneys are fully funded county by county. county. county base. And since the pandemic, district attorneys across the state have expressed concern about a lack of resources to resolve the backlog of court cases.

Taxes

The additional sales tax could make Cullman County one of the most expensive in the country to purchase medical marijuana products where it is legal to do so. Alabama is One of the 38 states that has legalized marijuana. – which is a Schedule 1 drug that is federally illegal – for medical purposes.

Most medical marijuana states impose an additional sales or excise tax, but almost all are lower than Alabama. Some states, such as Florida and Iowa, apply the sales tax rate only to medical marijuana purchases.

And in states where recreational marijuana is allowed, the tax rate for medical marijuana is much lower. In Colorado, the first state to legalize recreational use, the tax rate on recreational marijuana sales 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 within a short drive of the state. However, Florida voters will decide whether the Sunshine State should be the first in the South to legalize recreational marijuana on Nov. 5, through a constitutional amendment that requires 60% support.

Harbison said the Nov. 5 referendum will apply to both medical and recreational marijuana, although he admits Alabama is nowhere near legalizing recreational use.

“What this does is tax the sale of cannabis products, period,” Harbinson said. “It does not exempt medicinal cannabis. I think we are a long way from Alabama becoming a recreational place. But it would tax that if it goes into effect.”

Prosecutors, mental health.

The issue in Cullman County is whether medical products should be used to provide funding to district attorney’s offices, many of which opposed legislation creating a medical marijuana program in Alabama in 2021. Crocker was elected to his position two years after the medical marijuana vote. in the Legislature.

Crocker said the backlog of criminal cases in Cullman County dates back at least eight years.

“We inherited a backlog of 20 murder cases and we didn’t solve any of them in the last year and a half and we tried a 2017 murder case just two months ago,” he said. “I would like to mention that Cullman County is one of the fastest growing areas in Alabama. Therefore, we are already seeing more and more people here and more cases.”

Cullman County, with more than 92,000 residents, consistently ranks among the top 10 fastest-growing counties in Alabama.

Crocker said state funding for his office is inadequate, a common complaint raised by district attorneys in Alabama. Funding shortfalls have forced local governments to open their wallets to support prosecutors. On mobile, for example, The City Council last year approved a three-year agreement to spend $1.5 million (or $500,000 a year) to pay prosecutors and help reduce the backlog of cases.

“In my office, we have about the same (deputy district attorneys) that we had about 20 or 30 years ago,” Crocker said. “I would love to have three or four more ADAs. If we can increase our staff, that will allow us to move faster, which will be better for the victim and the victims of crime. It is also better that the cases of people accused of crimes who are in jail be resolved. It’s also good for law enforcement. “They are working every day and bringing these cases to us.”

Crocker said the longer a case remains unsolved, the more likely it is to weaken.

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

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

Chris Van Dyke, chief operating officer of WellStone, Inc., with facilities in Huntsville and Cullman, said that if the referendum passed, “there are definitely a lot of needs.” He said WellStone has a “neutral” stance on the referendum.

“We would love to see crisis services expanded,” Van Dyke said. “We are building it quite a bit in Huntsville and we can (send) people to Huntsville but, long term, we would love to have a crisis center here that is more local. Residential is also a problem. “A lot of people are homeless or struggling to get housing because apartments are not as affordable.”

Flow state

The referendum has received very little attention in Cullman County and has not generated any campaigning. He Alabama Medical Cannabis Commissiona state agency regulating the program, does not intervene in local tax referendums, according to spokeswoman Brittany Peters.

The entire program continues to change amid litigation that has halted its implementation and concerns raised about the selection process.

Alabama was initially supposed to have started its medical marijuana program by fall 2022, although the commission spent much of that year laying out the framework for how the program would be regulated and operated.

A Montgomery Country judge appointed retired Circuit Judge Eugene Reese act as a mediator in long-running cases over who gets licenses to grow and sell medical marijuana in Alabama.

Under the 2021 Alabama law, the commission can grant up to 12 cultivator licenses, four processor licenses, four dispensary licenses and five integrated facility licenses. The commission announced in late 2022 that it received a total of 94 applications from companies seeking licenses to grow, process, transport, test and dispense medical cannabis products.

The companies that were denied licenses accused the commission of violating state law and administrative rules in selecting the winners. The commission, since 2022, has attempted to grant licenses three times and rescinded grants twice over concerns about the selection process.

Ball, sponsor of the 2021 legislation, said he is hopeful the mediator can resolve the concerns and the program can finally begin.

“I think the judge wants to get this going,” he said.