Senate OKs legislation to reduce business license costs for pharmacies

The Alabama Senate has approved legislation that would allow pharmacies to remove prescription drug sales from their gross receipts when calculating the cost of their business license. Thursday, March 9, the Senate, without any debate, voted 23-1 for SB31 by Sen. Billy Beasley, D-Clayton. Senate President Pro Tem Del Marsh, R-Anniston, briefly considered asking that the bill be reconsidered, but ultimately allowed it to go forward. The bill now heads to a House committee for consideration.

The companion legislation, HB58 by Rep. Ron Johnson, R-Sylacauga, is ready for consideration by the full House. The House Health Committee approved it Feb. 9.

The legislation would stop what one Alabama Retail Association member calls “robbery without a gun.

Pharmacist Hamp Russell, owner of City Drug on Dexter Avenue, just blocks from the Alabama Capitol, recently told Alabama Retail that his city business license – which is more than $12,000 – is based on his total revenue, rather than taxable revenue.

Prescription drugs in Alabama are not taxed. Those costly medications account for 90 percent of City Drug’s inventory, and the amount the drug store makes on prescription drugs “is determined by an insurance company” or Medicaid and Medicare, Russell said. He said his profit margin is less than 2 percent. The city “is robbing me without a gun,” said the business owner, who has been an Alabama Retail Association member since 2015.

Pharmacists from all over the state have spoken out in favor of the bill and against the current method of calculating pharmacy business license costs.

Marsh stopped this legislation last year because he said cities would lose revenue they had already budgeted. Thursday, Marsh asked that pharmacists and local governments come to some agreement before the bill receives a vote in the House. Ken Smith, executive director of the Alabama League of Municipalities, has told lawmakers the loss to cities would “have to be made up with some other revenue.” Smith also called the legislation a “gateway” bill that would lead to attempts by other industries to reduce their business license obligations.

In 2016, the governor pocket vetoed legislation that would have limited where and under what circumstances home health care or durable medical equipment companies need a city business license.

The Alabama Retail Association supports simplification of business and delivery licenses in Alabama.

This article is part of the Alabama Retail Report, a communication for Alabama Retail Association members. Not a member? Join us!

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