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I 502 Marijuana Law Update: Taxation Legality Challenged

On Behalf of | May 16, 2014 | Marijuana Law

One of the most widely used arguments for recreational marijuana legalization is now being challenged as violation of federal law. A lawsuit recently filed in Washington asks whether Washington State can legally tax an activity that is illegal under federal law.

If you have questions about I-502’s taxation regulations, or about the recreational marijuana business in general, you should contact a local marijuana law attorney.

Similar to the federal case regarding medical marijuana in Oregon, this recently filed case seeks to force the issue of the conflict between federal laws and state laws. In this case, a man facing charges both for criminal distribution of marijuana (a federal crime) and for failing to pay the state Department of Revenue taxes from that distribution argues he can’t pay the state taxes without implicating himself in the criminal matter. He argues, therefore, Washington should not be allowed to tax him on a federally criminal activity.

Though few doubt the recreational marijuana sales create a conflict between federal and state law, the case will likely turn on the Court’s specific interpretation of what exactly is being taxed. For example, the author of Washington’s marijuana law argues since the taxation is on the activity, rather than the marijuana product, there is no conflict of laws. In fact, the US Supreme Court has held even where an activity is unlawful, that activity may still be taxed.

Like the case in Oregon, this case presents the opportunity for the court to confront the conflict of laws issue in a decisive manner. Whether either court takes that route is yet to be determined. You should contact a marijuana business law attorney to help you navigate through these and other complex marijuana law issues.