Lawsuit Seeks To Bar Washington State From Collecting Pot Taxes

[May 10, 2014]  By Jonathan Kaminsky
 
 OLYMPIA, Washington (Reuters) - A federal lawsuit filed this week challenges Washington state's ability to tax marijuana sales given the drug's illegal status under federal law.

The suit was filed on Thursday by a medical marijuana producer who is both under prosecution for the criminal sale of pot and facing demands from state officials that he pay taxes on those sales.

The suit claims that forcing Martin Nickerson to pay more than $62,000 in taxes would violate his constitutional right against self-incrimination. It also questions whether federal laws preempts the state from collecting taxes on pot.

Nickerson's attorney, Douglas Hiatt, is a longtime Seattle-area marijuana activist who opposed the successful 2012 effort to legalize the drug in Washington state.

Hiatt, who did not return messages seeking comment, has said that meaningful marijuana reforms must flow from erasing existing pot laws that criminalize the drug's production, sale and use.

In 2012, voters in Washington state and Colorado became the first to legalize adult recreational use of the drug. More than 20 U.S. states have approved medical marijuana on a broad basis and others on a narrower basis, according to the National Conference of State Legislatures.

Minnesota state Representatives on Friday approved a bill that would establish an observational research study to make medical marijuana available in liquid or pill form to certain patients.

Colorado and Washington state have fed the momentum for pot liberalization efforts elsewhere. A legalization measure is set to go before Alaska voters in November while activists in Oregon are collecting signatures for a similar initiative on the November ballot.

The U.S. Department of Justice announced in August that it would not interfere with state efforts to regulate and tax marijuana provided they're able to meet a set of requirements that include keeping it away from children and restricting its flow into other states.

Alison Holcomb, an attorney with the American Civil Liberties Union who was the main author of Washington state's successful ballot initiative, said the suit is a long-shot effort to take down the state's legal pot system.

Suppliers in Washington state's recreational pot market have already made public their intent to break federal law, Holcomb said, so paying taxes on their proceeds would not do much to further incriminate them.

"Paying taxes on marijuana implicates you, but so does everything else about being engaged in this system," she said.

(Reporting by Jonathan Kaminsky; Editing by Mary Wisniewski and Ken Wills)

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