POST CATEGORY: Access, Northwest, Profiles

The future of taxing pot

May 11, 2014 | WES ABNEY

Why Doug Hiatt & Martin Nickerson are fighting the feds over buds and bucks to avoid a nasty new legal precedent

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Attorney Doug Hiatt with his client, Martin Nickerson, owner of Bellingham's Northern Cross Collective and Samish Way Holistic 
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martytaxquote2d.jpgAs legalization fever looms over Washington like a manic fog, Martin Nickerson’s medical Cannabis taxation case continues to set a dangerous precedent for the future of all Cannabis businesses.

His case has escalated to federal court, a point of no return. The crux of the case can be summed up in one simple question: Can a state tax a federally illegal and controlled Schedule 1 substance?

For those who have not been following our coverage of Martin’s case, we have laid out a timeline of the steps in the case (see breakout box). It clearly illustrates the impossibility of the circumstances that Martin has been forced into. If he pays his sales tax, he could be incarcerated for 14 pending felonies. If he doesn’t pay his sales tax, he risks further action by the state Department of Revenue on a tax bill that is rapidly approaching six figures.

The strategy that attorney Douglas Hiatt has developed for Martin’s case involves murky territory. Nobody has taken a state into federal court regarding Cannabis. Period. And with the issue at hand being taxation, a lot of potential revenue is on the line.

“In a nutshell, we’re stuck,” Hiatt said during an interview in his downtown Seattle office. “We have to go to trial. The whole framework has been completely screwed up. Federally everything is still illegal, and we have a recreational vs. medical battle that is making everything worse.”

Their goal is to force the court to rule on whether sales tax can be collected while Cannabis is illegal on the federal level. Such a ruling could have many implications locally and nationally, and affect the future of Cannabis legalization. Colorado is collecting roughly $2 million a month in recreational sales tax alone, making the stakes high for money-hungry state governments. If the taxation is ruled illegal, state governments, including Washington and Colorado, could potentially lose billions of dollars.

kettlefalls5-quotess.jpgConversely, the question could force the federal government to reschedule Cannabis. Cannabis is a Schedule 1 drug, which means, according to the feds, it has no proven medicinal benefits. That’s an obvious fallacy, considering that 21 states and the District of Columbia recognize the medical use of Cannabis and 12 more are considering it in 2014.

“This issue is out there, but I don’t know if the feds will take our case or toss us. But we have hit a point where we don’t have a choice,” Hiatt explained. “We are also confident that we have a valid argument that needs to be heard. But we won’t know the outcome until we get to court.”

Hiatt will have filed this by the time of print, leaving a potential court day set in either May or June. Until then, it’s business as usual for Martin at his Northern Cross dispensary.

“We are going to keep helping patients, and hope that the state and the federal government can figure out this tax and scheduling situation out once and for all,” he said.

Martin is facing the rest of his natural life behind bars.

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