Medical marijuana dispensaries are incorporated as non-profit corporations – this is a huge tax loophole. Because they must zero out the income balance at the end of the year, they pay zero corporate taxes.
They do not have shareholders, only “directors of the corporation,” who can be paid a salary.
How are they paid? Hard to know, because the names of these directors are confidential and only known to Arizona Department of Health. In fact, everything on the application is confidential. That would include the medical marijuana corporate members and employees. No one knows if they are deducting payroll taxes, unemployment insurance or Social Security taxes. And do they claim 1099 Employees, are they paying minimum wage, or paying for labor in cash?
Due to the lack of transparency and the veil of secrecy, there is no tangible way for the Arizona Department of Revenue to do their job. Why? Because the health department is not allowed to share any information, including sales data.
SB 1024 is designed to ensure all Transaction Privilege Tax is collected from the sales of medical marijuana products. Currently, the health department does not share sold inventory/sales data from medical marijuana to ADOR. Therefore, ADOR has no idea if the point-of-sale of medical marijuana in the dispensaries is accurate when they are audited. The bill would have ensured state agencies are communicating properly and sharing important data for audit.
The medical marijuana dispensary license should be treated the same as any other retail businesses in the state that collects privilege taxes and should NOT receive special status and unwarranted protection on remitting all of the privilege taxes owed to the state.
For years, we’ve been hearing from the Democratic Caucus that we