Marijuana Advocates Say Special Taxes Lawsuit Could Overturn All Pot Licensing Regs
In June, we told you about a lawsuit filed by attorney Rob Corry on behalf of a group called No Over Taxation. It contends that special taxes placed on marijuana sales are illegal and unconstitutional; see the complaint and more documents below.
Tomorrow, a hearing in the case is scheduled, and cannabis advocates encouraging attendance contend that should the suit be successful, it could spell the end for marijuana licensing and registration regulations statewide.
Plaintiffs in the suit, shared here along with a summons to defendants such as Governor John Hickenlooper and Denver mayor Michael Hancock, include marijuana activist Kathleen Chippi and Miguel Lopez, founder of the Denver 4/20 rally. Here's the complaint's synopsis:
Plaintiffs, through undersigned counsel, hereby petition and apply for injunctive and declaratory relief, and for a refund and damages, against Defendants and their collection and enforcement of illegal and unconstitutional Marijuana Taxes, as provided in Colorado Proposition AA and Denver Referred Question 2A.
|Rob Corry at an anti-marijuana taxation rally last year.|
This view would seem to contradict Amendment 64, which calls for an excise tax of up to 15 percent. However, Corry told us in June, "there's nothing in Amendment 64 or the campaign for it that ever mentioned a separate sales tax on top of the excise tax. Basic economics tells you that a 15 percent excise tax is already high, and a sales tax that's directly assessed on the consumer raises costs astronomically when you couple them with the excise tax. But the government has expanded that narrow mandate to create a much more massive tax burden."
The special pot-tax provisions are attacked on a number of fronts that Corry said are "independent causes of action -- they stand alone." Here's his synopses of each one.
"The primary cause of action is based on the Timothy Leary case before the U.S. Supreme Court," he pointed out, referring to 1969's Leary v. U.S. "That case struck down the Marihuana Tax Act of 1937 after Leary successfully argued to the court that payment of a marijuana tax was a violation of the Fifth Amendment right to avoid self-incrimination.
"The second claim is based on the public-policy argument that state and local governments cannot collect taxes expressly on activity that is federally illegal," he went on. "So the taxes are illegal.
"Our third claim," he allowed, "has to do with Amendment 64 itself. The purpose of Amendment 64 was to tax marijuana like alcohol -- and there's also a component in Amendment 64 that prohibits any regulation that is 'unreasonably impracticable.' And this is that. The taxes are so high that it makes it impracticable to run a reasonable business.
"Amendment 64 set out to end prohibition, the black-market trade in Colorado, and transform it from an unregulated, underground market into a regulated, legitimate, tax-paying market. But if you set taxes too high, you empower an underground market. So high taxation is 'prohibition lite.' And even as the state government has made it a criminal offense not to pay marijuana taxes, the federal government has made it a crime to pay the taxes. That puts individuals between a rock and a hard place."
Regarding the fourth claim in the complaint, "it's based on equity," Corry maintained. "Equity is a separate legal concept that allows plaintiffs to potentially recover moneys when they don't have a legal remedy because it would be inequitable for the defendants to keep the money. And we're arguing that since state and local governments are retaining money from illegal activities, they ought to refund all of it."
Governor John Hickenlooper is listed as a defendant in the complaint.
Such arguments will be heard tomorrow -- and a Cannabis Therapy Institute release featuring details about the hearing, which gets underway at 9 a.m. in Denver District Court, suggests that it could have far-reaching repercussions. We've reproduced the release below, but one excerpt reads:
If successful, Corry's lawsuit could be the basis for overturning ALL regulations regarding marijuana licensing and registration in Colorado on the same grounds. As long as marijuana remains illegal under federal law, states cannot require people to give any information about themselves in order to distribute or purchase marijuana. ANY and ALL requirements to identify oneself would result in a "real and appreciable" risk of self-incrimination, and would require a citizen to implicate himself in federal crimes.Continue to see the lawsuit, the summons and the Cannabis Therapy Institute release about tomorrow's hearing.