Juice sold with love – Wacky Tax Wednesday
- Sales and Use Tax
- August 24, 2016 | Gail Cole
Is it poetic justice that some savvy sellers in the Land of Loopholes have discovered a loophole that enables them to sell marijuana?
Residents of the District of Columbia voted in 2014 to legalize the possession of small amounts of marijuana for personal, in-home use by adults in the District. Under Initiative 71, possession and use on personal property of two ounces or less of marijuana is legal, as is cultivation of up to six marijuana plants. The transfer of one ounce or less of marijuana to another person is also legal, provided both of the following are true:
- No money, goods or services are exchanged
- The recipient is 21 years of age or older
Selling any amount of marijuana to another person is prohibited under D.C. law and under Initiative 71.
So what’s an entrepreneur with a passion for selling pot to do?
The answer: sell juice.
One D.C. business delivers an array of products to consumers in the District. Its online shop seems to sell a wide variety of accessories and apparel, though in reality, only a handful of items are available. It also sells a few juices — really good juices — sold with love on the side.
“Love” is a euphemism for cannabis, a word written just once on the company’s website, in the About Us section: “The finest cannabis (& cold pressed juice) delivered in record time.” A bottle of cold-pressed Berry Lemonade with “LOVE” goes for $55. Prices vary if you want your juice with “Lots of Love” or “Love On-Demand” (when available). Shipping charges and taxes are calculated at checkout.
Not a whole lot of additional information is provided. Consumers with “comments, concerns, and order inquiries” are invited to email the business.
The juice is subject to D.C. sales tax as a prepared food ready for immediate consumption. The marijuana isn’t subject to any taxes because it’s not technically for sale (and since it’s illegal to sell marijuana the District, there are no special taxes on the sale of marijuana).
That’s not the case in Colorado, Oregon, and Washington, three states that have legalized the sale of recreational marijuana. Although businesses selling pot face certain challenges because recreational marijuana remains illegal under federal law, the states are reaping tax revenue from the sales. In Colorado, retail marijuana is subject to state and local sales tax plus an additional 10% state sales tax. Under a new policy that took effect in Washington State on July 1, 2015, retail sales of recreational marijuana are taxed at 37%. Oregon expects to receive approximately $43 million in tax revenue from sales of recreational weed (currently taxed at 25%). That money funds alcoholism and drug services and treatment programs, mental health care, the Oregon State Police, and city and county law enforcement.
Some of the most vocal arguments in favor of legalizing recreational marijuana come from those who would like to tax it, not necessarily consume it. Black market sales contribute no tax revenue to states or localities.