City of San Jose v. MediMarts, Inc.

The City of San Jose (City) brought this action to collect unpaid business taxes from defendants MediMarts, Inc., and its president, David Armstrong. In the course of the proceedings defendants sought a preliminary injunction against the City’s attempts to stop them from operating their medical marijuana collective. On appeal, defendants contend that payment of the marijuana business tax (San Jose Mun. Code, § 4.66.010 et seq.) would force Armstrong to incriminate himself in violation of his Fifth Amendment privilege by admitting criminal liability for violating federal drug laws. We conclude that the privilege against self-incrimination has no application in these circumstances. We must therefore affirm the order.

Background

MediMarts was established in 2009 as a nonprofit collective under the name Bay Pacific Care, Inc. Bay Pacific Care paid the marijuana business tax (hereafter, MBT) from March 2011 through July 2011. In August 2011 the collective changed its name to MediMarts, and it continued paying the tax through April 2012. In May of 2012, however, MediMarts discontinued paying the MBT, instead submitting tax returns showing no money due. The City began sending…