San Jose Medical Marijuana Dispensary Is Fighting Taxes

The operator of a San Jose medical marijuana dispensary thinks he owes no taxes.

A San Jose medical marijuana dispensary is resisting state and local sales taxes. Or at least is fighting for clarification in the law.

All American Cannabis Club, or A2C2, owes $250,000 to the state Boar of Equalization. But A2C2's founder and director, Dave Hodges, says the state owes him $11,000 -- because his business does not conduct sales, according to SF Weekly.

At issue is the definition of what, exactly, a medical marijuana business does. Nearly every dispensary pays state sales tax, which, in San Jose's case, increased to over 8.3 percent as of Oct. 1.

But according to San Jose city law, Hodges's dispensary does not conduct sales. Instead, it collects donations from qualified medical cannabis patients -- and a donation is not a sale, and therefore not subject to a tax.

State law is also unclear -- and indeed, many law enforcement officials to this day claim that sales of marijuana are illegal. If so, why does the state collect sales tax?

Hodges has appealed the $250,000 in sales taxes the state says he owes. He also has a letter from the Board of Equalization stating that his businesses does not engage in sales.

Hodges is hosting a one-day informational event in San Jose to tell other dispensaries and interested parties about his situation. To find out more or to attend, visit

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