Marijuana Co-op Member Says State Can't Tax a Federal Crime
SEATTLE (CN) - Washington state can't make a member of a medical marijuana co-op pay thousands of dollars in marijuana tax because he's being federally prosecuted for it, the man claims in Federal Court.
Martin Nickerson Jr. sued Gov. Jay Inslee, Attorney General Bob Ferguson and state tax chief Carol Nelson, in Federal Court.
Nickerson wants to know whether the state can "grant authority to local and county governments to authorize licensing and collect taxes on an activity that is a crime."
He wants the state enjoined from collecting tens of thousands of dollars of marijuana taxes "until this court can decide whether the state of Washington's actions are preempted by the federal Controlled Substances Act."
He seeks declaratory judgment "as to whether the state of Washington can tax actual sales of marijuana, medical or otherwise, under state law when it remains illegal federally under 21 USC et seq., the Supremacy clause, and Object Preemption Doctrine."
And he wants a preliminary injunction against tax liens or other enforcement actions while he is defending himself from the federal criminal charges, to protect his Fifth Amendment rights.
Nickerson is a member of a collective garden - federal law makes no exemption for medical marijuana, or any use of marijuana, despite legalization of medical marijuana in several states and recreational use in two of them - Colorado and Washington. Washington legalized medical marijuana in 1998, by voter initiative, and legalized recreational use in 2012.
That in itself created a legal hornet's nest, as the enabling legislation authorized cities and counties to issue business licenses and regulate medical marijuana, and collect local sales taxes, "although marijuana still remains a crime under both state and federal law," the complaint states.
That created a conflict with federal law, as state law "purports to grant Washington cities and counties authority to regulate a schedule I controlled substance."
Washington's Department of Revenue began warning medical marijuana providers on May 31, 2011 that it could tax pot sales.
On March 15, 2012, Bellingham Police raided Nickerson's Northern Cross Collective, and seized property and all the money on hand. Federal and state agents raided his house the same day and seized more property.
On Nov. 13, 2013, the state told Nickerson he owed $6,188 in marijuana taxes, and claims the North Cross Collective owed $47,783 in marijuana taxes.
Those tax bills have since been increased to $7,155 and $55,017.
Nickerson's attorney told the state that he could not defend against the tax charges without effectively waiving his Fifth Amendment rights in the federal criminal case.
On New Year's Eve, 2013, the state sent out hundreds more letters warning businesses it was taxing them for marijuana. On Jan. 8 this year Nickerson appealed the tax assessments, and requested a hearing to determine whether the state had the authority to tax marijuana. The state denied the appeal on Jan. 24.
On March 10, JP Morgan Chase Bank garnished Nickerson's bank account and deliver the $824 it contained to the state tax department, which claims that he and his co-op still owe more than $61,000 in marijuana taxes. In April the state said it intends to seek more money in sanctions for failure to pay the pot taxes.
Nickerson claims the state violated his rights under the Fifth, Sixth and 14th Amendments. He seeks declaratory judgment on whether the state is preempted from collecting taxes on sales of the federally illegal substance. He also seeks a protective injunction while his criminal case continues.
He is represented by Douglas Hiatt.