San Jose is about to crack down on two churches that apparently are selling marijuana despite not having permits to do so, Councilwoman Devora “Dev” Davis said last week.
In an email, Davis said that the city attorney’s office “is preparing to take court action to shut down both illegal dispensaries.” She was referring to Coachella Valley Church at 2142 The Alameda and Oklevueha Native American Church of South Bay at 265 Meridian Ave.
“It’s a priority for me, so I will be doing everything I can to shut down illegal pot clubs, regardless of whether they call themselves churches or not,” Davis said. For the past few years, the city has allowed only 16 cannabis clubs to operate as long as they have permits and pay sales and business taxes.
Davis said City Attorney Rick Doyle told her the two churches “have been in the hopper as part of the regular process of shutting down illegal dispensaries as they pop up.”
Staff and members of Coachella Valley Church, which opened in May, previously said sales and use of cannabis are exempt under the banner of religious freedom. Members use marijuana both in the downstairs chapel and on the church’s rooftop lounge as part of their Rastafari practice, they said.
“It helps me to clarify my own mind, to get to my sense of purpose and start living my truth,” Grant Atwell, a shaman who also goes by his Native American name Star Touches Earth, said in a recent interview. Atwell occasionally speaks at the church’s weekly services and advocates the spiritual and medical use of marijuana.
“The majority of adults have come across it in their lifetime,” Atwell said. “However, we have to use it appropriately, in a good way for medical and sacred ceremony.”
Coachella director Donny Lords previously said the church’s nonprofit status means its marijuana sales are non-taxable.
Oklevueha Native American Church of South Bay also claims the same right to sell non-taxed marijuana products to its members.
Davis said the city can’t do anything about members smoking marijuana on private church property but churches’ nonprofit status don’t give them a loophole or exemption from paying the city’s marijuana business tax.
“The cannabis tax applies whether you are a legal or not-legal dispensary,” Davis said. “They’re basically violating law if they don’t pay taxes on cannabis sales, even if they’re not a dispensary.”
Lords has described the sales as “donations,” but according to the state Board of Equalization, “a seller of any tangible personal property is liable for the sales tax whether they collect the tax reimbursement from their customer or if they don’t collect any tax.”
“When selling items for a ‘suggested donation’, we would consider these sales subject to sales tax,” Paul Cambra, spokesman for the California Department of Tax and Fee Administration, said in an email.
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“A taxpayer could sell these items on a ‘tax-included basis,’ which would make it seem to the purchaser like they aren’t collecting tax,” Cambra added. “But if they are operating without a seller’s permit, then they are not following the law.”
Last year, San Jose collected $10.5 million in marijuana business taxes alone, not counting sales taxes from actual transactions, according to city officials.
Davis said she is also worried about where and how the marijuana sold at the churches is grown and produced. However, some items sold at Coachella were the same brands as those sold at several legal dispensaries that this reporter visited.
“I’m concerned about the product they’re distributing,” she added. “We have regulations about the product itself to keep people safe.”
Coachella, which was recently inspected by code enforcement officials, and Oklevueha Native American Church could both face fines of up to $50,000 for each day they are open.
Davis reminded residents that both medical and recreational users still need to be 21 or older to buy pot in San Jose when Proposition 64, which makes the sale of recreational pot in California legal, goes into effect Jan. 1.
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