(Joe Amon, Denver Post file)

Is paying pot tax self-incriminating? Activists lose initial court challenge

Marijuana activists lost an initial bid Friday to strike down special taxes on recreational pot because they require businesses and consumers to implicate themselves in federal crimes.

At the end of a nearly day-long hearing, Denver District Court Judge John Madden ruled the activists hadn’t done enough to show that tax collections needed to be stopped right away with an injunction.

“I can’t find that there’s immediate, irreparable injury based on the testimony today,” Madden said.

However, the lawsuit challenging the taxes will continue, and Madden will decide the overarching questions of constitutionality later.

100 questions about legal marijuana: Your go-to source for Colorado info

The activists say the taxes must be stopped because they violate the Fifth Amendment rights against self-incrimination of marijuana business owners and consumers. By paying taxes, the activists argue, they are acknowledging to the government that they are violating federal law.

“These taxes are a gift-wrapped open-and-shut federal prosecution,” Rob Corry, the activists’ attorney, said during the hearing.

The hearing quickly ran into the thorny bramble of conflicting federal and state laws over marijuana — the federal government considering marijuana strictly illegal; the state government considering it something that can be sold legally at licensed stores. Madden said he had concerns about the kind of relief he was being asked to provide.

“How can a party be able to receive a preliminary injunction that would assist in violating federal law?” Madden asked.

Name that strain: Some of the unique strains we’ve reviewed — Red Headed Stranger #14, Green Crack, Headband, Super Silver Sour Diesel Haze, Oaktown Crippler, Poochie Love, Stevie Wonder, Island Sweet Skunk

Attorneys for the state and for the city of Denver, which is also a defendant in the suit, said Corry’s side didn’t show enough proof to justify the injunction. For one, they pointed out during testimony Friday morning, none of the plaintiffs who testified currently owns recreational marijuana stores. And, they argued, there is no evidence federal prosecutors are targeting marijuana store owners or consumers based on tax payments.

“Getting rid of the taxes is not going to prevent the federal government from prosecuting,” Charles Solomon, an attorney for Denver, said.

Corry, though, argued he was in a Catch-22. In order to present testimony from business owners concerned their tax payments are self-incriminating, he has to put witnesses on the stand to disclose their marijuana sales, thus incriminating themselves.

Madden said he’s looking forward to the remainder of the case, which could take months to resolve.

“There are fascinating issues on both sides,” he said.

John Ingold: 303-954-1068, jingold@denverpost.com or twitter.com/johningold

Six Months In:
A special report from The Cannabist

$202 million in pot sales?! 10 Colorado facts from six months into 2014

Big changes ahead: Colorado’s recreational marijuana industry started a transformation July 1 that could add hundreds of new pot businesses to the state and reconfigure the market’s architecture

Pot forum video: How’s it really going in Colorado? Panel discussion on edibles issues, tax revenue questions, the need for increased public education and more

Is that really a thing? 10 strange but true stories as ganjapreneurs leap into cannabis market

Watch: Colo. Gov. John Hickenlooper, veteran broadcaster Katie Couric talk marijuana in Aspen on July 1, the six-month anniversary of legal recreational pot sales in the state

This story was first published on DenverPost.com