Decision in U.S. Tax Court Has Ramifications for Medical Marijuana Dispensaries
A new U.S. Tax Court decision could complicate life for medical marijuana businesses across the country, as well as putting a former San Francisco dispensary on the hook for a huge tax bill.
"The dispensing of medical marijuana, while legal in California, among other states, is illegal under federal law," Tax Court Judge Diane L. Kroupa said. "Congress has set an illegality under federal law as one trigger to preclude a taxpayer from deducting expenses incurred in a medical marijuana dispensary business. This is true even if the business is legal under state law."
The ruling means Vapor Room owner Martin Olive owes Uncle Sam a lot of money, although the amount is unspecified, but less than the $2.1 million the Internal Revenue Service wanted at first. Beyond that, the ruling means other medical marijuana dispensaries could have a harder time securing valuable tax deductions.
"In the end, it's going to be very important," Las Vegas-based tax expert Russell Clayton said of the ruling in an interview Friday. "This is going to have a major impact on medical marijuana (operations)."
In other words, the federal government is sure to increase the use of the IRS against medical marijuana dispensaries, especially if they do not close voluntarily.
Olive had gone to court to challenge the IRS's determination that he owes more than $1.8 million in taxes, and about $378,000 in penalties, for the years 2004 and 2005. Olive reported the Vapor Room had gross receipts of $1 million in 2004 and $3.1 million in 2005. But tax investigators subsequently concluded that Olive had underreported his income, and that the Vapor Room really grossed $1.9 million in 2004 and $3.3 million in 2005.
Dispensaries nationwide should fear the coming of the tax man.
Teens Getting Diverted Medical Marijuana? Advocates Respond
A new study out of Colorado claims to show that a lot of medical marijuana is being diverted into the hands of non-patients, specifically into the hands of teenagers.
Advocates are responding, like Michael Elliott, executive director of the Medical Marijuana Industry Group in Colorado. "Since Colorado regulated the sale of medical marijuana in 2010, Colorado has seen decreases in youth marijuana consumption, suicides, traffic fatalities, and crime. All of these studies point to one conclusion -- Colorado's medical marijuana framework is working," Elliot says, adding, "MMIG's members are responsible business owners who support rigorous enforcement of the Colorado Medical Marijuana Code, and work to ensure the industry is run with the highest standards."
Mason Tvert from the advocacy group SAFER also spoke out, saying, "We have hundreds of state-legal cannabis businesses operating in Colorado and they were able to cite a few dozen examples of problems over the past three years -- and relatively few were from 2012." Tvert is one of the sponsors behind Amendment 64 in Colorado, which would legalize and regulate marijuana like alcohol.
The fact is that opponents of medical marijuana have put themselves in a very tough position. They have to justify why sick people shouldn’t have the option of medical cannabis, an unjustifiable position. So they must claim doom and gloom about stoned teenagers running around everywhere and destroying society.
But as it the case with alcohol and cigarettes, if you want to limit teen exposure to something, you put it in a legal and regulated market. Drug dealers do not check I.D. It is literally impossible for teens to get something easier in a legal market as opposed to an illegal one, because only legal markets have any kind of “safeguards” at all regarding age.
Medical Marijuana Up For Debate in Federal Court
Delicious looking Edibles
Michigan Appeals Court says Cities and Towns Cannot ban Medical Marijuana Growing and Use
In an opinion released just this morning, a unanimous three-judge panel of a state appellate court said the local ordinance adopted by the city of Wyoming, MI that banned medical marijuana cultivation and use was clearly pre-empted by the medical marijuana state law, and that local governments could not use the federal prohibition on marijuana as an excuse to ban it.
The ruling is great news for medical cannabis patients in Michigan. Advocates say towns and cities across the state have been trying to thwart the state’s medical marijuana law, which was approved by voters in 2008.
“The entire medical marijuana community is elated by this decision,” said Tim Beck, one of the leaders in the successful ballot proposal in ‘08, “It confirms our belief that states have a right to regulate their own affairs.”
This leads us to a very important sentence from the court about federal and state law. “Congress can criminalize all uses of medical marijuana, (but) it cannot require the state to do the same,” the courts said. In other words, simply relying on federal law doesn’t exempt you from following the laws of your state if you are a city or town.
If more states adopt this position, it will certainly cut down on discrimination on medical marijuana patients. And the more resistance that the feds feel from states on the issue of medical marijuana, the harder it will be for the Department of Justice to continue its crackdown. And the harder it becomes for the DOJ, the sooner they will rethink their course of action.
The feds count on many states just giving up their medical marijuana programs without a fight. For the sake of medical marijuana patients everywhere, let’s hope they are not right.
Billboard calls for TN to legalize medical marijuana
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