Marijuana: State and City Officials Admit Sales System Incriminates Pot Buyers, Attorney Says

Last week, we previewed a court hearing in a lawsuit declaring Colorado's marijuana sales taxes illegal and unconstitutional.

Attorney Rob Corry asked for a temporary restraining order to halt tax collection while the matter is considered, but Denver District Court Judge John Madden rejected that request at Friday's session. The ruling disappoints Corry, but he's optimistic about the case's future and feels plenty of interesting information came out -- including, he says, the admission by city and state reps that anyone buying marijuana in Colorado is incriminating themselves in the eyes of the federal government.

See also: Marijuana Advocates Say Special Taxes Lawsuit Could Overturn All Pot Licensing Regs

As Corry told us in June, when the suit (on view below) was originally filed, "The primary cause of action is based on the Timothy Leary case before the U.S. Supreme Court:" -- a reference to 1969's Leary v. U.S. "That case struck down the Marihuana Tax Act of 1937 after Leary successfully argued to the court that payment of a marijuana tax was a violation of the Fifth Amendment right to avoid self-incrimination."

Marijuana Deals Near You

Arguing against this interpretation were representatives from Colorado Attorney General John Suthers's office -- and according to Corry, "it was fascinating to see them basically discounting the importance of federal law and minimizing the federal violation, which is a major shift in the way they've looked at marijuana. And in my opinion, it's a positive shift that's been a long time coming. For years, they've argued that federal law trumps our state system and that our state system was somehow invalid because of federal law. But at least selectively, they're not really embracing federal law anymore."

The operative word in the last sentence is "selectively." Corry notes that a different interpretation is at the heart of the AG's approach to Dish v. Coats, a case before the Colorado Supreme Court. At the center of this controversy is Brandon Coats, a quadriplegic who was fired from his position with DISH for failing a drug test even though he's a licensed medical marijuana patient -- and in this instance, the state has argued that because marijuana remains illegal at the federal level, Coats's firing was lawful despite his cannabis use being legal in Colorado.

In Corry's view, "the attorney general is arguing one thing in the employment context -- saying this poor guy in a wheelchair can be terminated for his off-the-job marijuana use. But on the other hand, they say it doesn't matter that dispensary clients are incriminating themselves under federal law by paying taxes. So I think it is a selective reading of federal law and inconsistent on the part of the attorney general."

Corry adds that "both the State of Colorado and the City of Denver contended that the licensing and registration systems that are in place are already self-incriminating. Their position, which I think actually has some merit and the judge embraced somewhat, is that a temporary injunction against taxes wouldn't help because these entities and people are already sufficiently incriminating themselves. That does have the ring of truth to it, and we've been talking to clients and others about it, deciding if that might be a direction this needs to go in."

If this tack is successful, could it undermine Colorado's entire regulatory apparatus related to marijuana?

"I don't think it could take down the whole system," Corry replies. "What we would do is revert to what we had before July 1, 2010" -- the day when House Bill 1284, the measure that established the state's current rules for overseeing medical marijuana, took effect. As such, he goes on, "hundreds of dispensaries all over the state, and hundreds of grows all over the state, would all be operating legally under state law, and state and local governments couldn't take them down, because they were fully in compliance with the then-existing constitutional and local zoning laws."

Such an outcome would be okay by Corry, who dismisses many of the current statutes as "regulation for the sake of regulation. None of them have anything to do with the quality of marijuana, protecting the public, safety, efficiency -- and you can go on down the line. Banning previous felons: Who does that help? A two-year residency requirement for owning a dispensary: That's meaningless. Vertical integration: pointless."

At this juncture, Corry isn't sure which direction the lawsuit will take moving forward -- and there's a scenario that could half its progress entirely. "The judge has in his hands motions to dismiss from the state and local defendants," Corry acknowledges.

In his view, however, "I think it looks pretty solid that we'll move past the motions to dismiss and litigate the case on its merits."

Which could at least potentially be far-reaching. Here's the aforementioned complaint. Note that the the suit includes links to numerous articles and posts, with Westword among the news agencies cited.

No Over Taxation v. John Hickenlooper Complaint

Send your story tips to the author, Michael Roberts.

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