TIME Drugs

Colorado Marijuana Activists Don’t Want To Pay Pot Taxes

Colorado Marijuana Taxes
Brennan Linsley—AP A customer pays cash for retail marijuana at 3D Cannabis Center in Denver, May 8, 2014.

The lawsuit filed in Denver this week is just the latest to challenge discrepancies between federal and state drug laws

A lawyer representing various marijuana activists in Colorado has filed a lawsuit against the state’s governor and the mayor of Denver, claiming that residents buying or selling pot should not have to pay taxes, because that amounts to self-incrimination in the eyes of the federal government.

Attorney Robert Corry argues that the Fifth Amendment should prohibit the collection of such taxes, which include a 15% excise tax and 10% retail tax, because that creates a record of violating federal law–which still treats pot as an illegal substance, despite the fact that Colorado and Washington voters opted to legalize weed in 2012.

The case, filed in Denver District Court, could end up forcing the state and federal governments to address a discrepancy that has been left largely unresolved. The medical marijuana industry has struggled with legal issues raised by federal and state taxes for decades, and related cases are pending in federal tax court. There is for example a case currently pending in federal tax court, filed by a medical marijuana dispensary in Sacramento, Calif., arguing that dispensaries should be treated just like other small businesses when it comes to paying federal income taxes.

Earlier this year, attorney Corry represented the organizers of Denver’s annual 4/20 festival, marijuana’s unofficial holiday. In a letter to city officials, he argued that festival-goers should be able to smoke weed openly despite regulations against public consumption. He eventually rescinded that argument when it became clear that the permit for the entire festival might not be issued.

The first retail pot shops opened their doors on Jan. 1, 2014 and questions have continually arisen around conflicting state and federal views of marijuana, such as whether dispensaries can deposit money in banks. A spokesman for the Colorado attorney general told Reuters that the state will defend themselves vigorously in this case, saying that the “claims are bizarre and lack legal and logical consistency.”

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