IRS goes after medical marijuana in California

Category: News | Posted on Thu, March, 17th 2011 by THCFinder
Federal agencies have stepped up efforts to crack down on medical marijuana, and while high-profile ATF raids may be more immediately shocking, there is a less direct tactic being used that could spell the death of medical marijuana across the country, according to its opponents.
In the last several months, the IRS has begun targeting medical marijuana dispensaries in California, declaring that some owe millions in back taxes as a result of a section of U.S. tax code that the IRS is now applying to medical marijuana dispensaries.
This isn’t the first time the IRS has attempted to use this clause to go after medical marijuana dispensaries. In 2007, the agency assessed that San Francisco-based dispensary Californians Helping to Alleviate Medical Problems (CHAMP) owed nearly half a million dollars in back taxes. The IRS argued at the time that Section 280E of the U.S. Tax Code, created in the early ‘80s to prevent drug dealers from writing off “business” expenses, meant that because CHAMP’s business was built on a drug that is illegal under federal law, the business deductions it made that year were invalid. CHARM took its case to U.S. Tax Court and won, cutting its payments from $426,000 to $4,905.
So if there’s already a court precedent for the IRS losing a case just like this, why are they suddenly, vigorously pursuing it again? That’s not entirely clear — and the IRS refuses to comment on any audits it undertakes. And yet, Steve Fox, lobbyist for theNational Cannabis Industry Association (NCIA), says that he’s heard that up to a dozen dispensaries throughout California have been put through the audit process (and there could be untold dozens more who haven’t made it known outside of their organizations). Just three have gone public with their audits: the Harborside Health Center in Oakland,The Farmacy in Los Angeles and the much smaller Marin Alliance for Medical Marijuana (MAMM) in the northern town of Fairfax, which has the distinction of being the longest-standing licensed medical marijuana dispensary in the country, according to founder and director Lynette Shaw.
Shaw says that her dispensary is also the first in the country to be handed a “final determination” demanding back taxes from the IRS. The final determination, handed down earlier this month, rules that MAMM owes nearly $800,000 from 2009 alone because its businesses deductions are now considered invalid. Shaw has been filing tax returns with business deductions since MAMM’s foundation in 1997, but this is the first year that the IRS has taken issue with them. If the IRS goes back and audits MAMM’s books dating back to ’97, the dispensary would owe millions — millions Shaw says neither she nor her organization has.
Shaw believes that the end goal in all this is to hit her and other dispensary owners with astronomical back taxes that they will be unable to pay, a situation that would inevitably shutter every dispensary that gets audited. The Obama administration had issued a Justice Department directive in 2009 to not take action against medical marijuana dispensaries, and while Shaw has faith that the administration itself remains committed to honoring that plan, she’s convinced that “the DEA is using the IRS to get rid of us while Obama’s busy.” She thinks that the federal government may have targeted her first because of her involvement in a 1998 civil suit in which she and five other dispensary owners went up against President Clinton’s Department of Justice, which sought to stop them from distributing marijuana. The case was never given a final decision and finally died in court after the statute of limitations lapsed.


THC DUI bill moves forward, passing out of committee

Category: News | Posted on Fri, March, 11th 2011 by THCFinder
Medical Marijuana patients and recreational users of the drug filled the Old Supreme Court chambers of the Capitol Thursday as they emotionally testified against a bill to make driving while high a DUI per se. Targeting what they said were faulty or old studies, medical marijuana users failed to convince the House Judiciary Committee that marijuana did not pose a risk to themselves and others while they drove. The vote passed 6-3 with many members absent.
As introduced, HB 1261 makes driving with a blood content of 5 nanograms of THC or more a misdemeanor and creates the presumption that the person is driving under the influence of drugs as a result. The offense would essentially be treated the same as a DUI for alcohol.
“Some folks say that we are going to prevent legitimate medical marijuana users from exercising their right to drive,” bill cosponsor Mark Waller, R-Colorado Springs, said. “Well it is currently against the law to drive under the influence of marijuana just like it is any drug.”
Many of those testifying against the bill called into question the 5 nanogram per se limit and called for an 8 nanogram limit if there was to be a limit at all. They said that many long-term medical marijuana users have developed a tolerance that allows them to perform better than occasional users.
A number of experts testified to the effect that while a person may think they are not affected their body is not performing up to speed. They said one test that is done, for example, is to see if someone can cross their eyes–an action that those too heavily under the influence cannot perform.
Waller said the presumption of impairment can be rebutted, while Boulder Democrat Claire Levy said simply the bill was necessary to protect public safety.
“Whether you are a marijuana patient or not, it is a bill about public safety,” co-sponsor Levy said. “There are studies to support this result. Law enforcement, I think will behave responsibly in having probable cause to stop and to require a blood test and I think it is just a matter of common sense.


Naval Academy expels 3 more over synthetic pot

Category: News | Posted on Thu, March, 10th 2011 by THCFinder
ANNAPOLIS, Md. -- The U.S. Naval Academy says three more midshipmen have been expelled for using or possessing synthetic marijuana, bringing the total number of dismissals to 11 so far this year.
That's the same number of total expulsions for drug policy violations in each of the last two calendar years.
Synthetic marijuana can be purchased legally but is banned by the Defense Department and the Navy. The Naval Criminal Investigative Service is leading an investigation at the academy.
The academy has been trying to raise awareness about a growing trend of fake marijuana use. The superintendent and commandant have addressed the issue at school-wide forums. The academy says it also has increased computer monitoring of common synthetic drug websites.


MEDICAL MARIJUANA: No repeal vote for New Mexico this session

Category: News | Posted on Wed, March, 9th 2011 by THCFinder
Attempts to dissolve New Mexico's medical cannabis program have been aborted, according to a secretary in the office of freshman state Rep. James Smith, R-Bernalillo, who initially sponsored a bill to kill the program.
Smith's original bill, HB 593 (pdf), would have repealed the Lynn and Erin Compassionate Use Act, the 2007 law creating the state's medical cannabis program. As of Feb. 16, the program had served just shy of 4,000 patients.
But Smith's secretary confirmed that he's pulled the repeal bill, replacing it with House Memorial 53 (pdf), which would require the New Mexico Department of Health to conduct a study on the program's effectivenessand deliver it to the Legislature by October 2011. Part of the rationale for studying the program, according to HM 53, is that it "remains controversial."
N.M. Gov. Susanna Martinez: "I do not support distributing marijuana for any purposes ""


DEA Ban on 'Synthetic Marijuana' Takes Effect

Category: News | Posted on Mon, March, 7th 2011 by THCFinder

The federal Drug Enforcement Administration (DEA) has temporarily banned five chemicals whose effects mimic marijuana, following through on an announcement it made last November, NPR reported March 1.

NPR said over 3,000 calls were made to poison control centers "since last year" related to "fake pot." Side effects of using the products, as reported by emergency rooms, include "anxiety attacks, elevated heart rates, vomiting, even convulsions."

The DEA said it was outlawing the chemicals to protect public health and safety.

The chemicals are sprayed on herbs and spices and sold under names like "K2" and "Spice." They include JWH-018, JWH-073, JWH-200, CP-47,497, and cannabicyclohexanol. Although 16 states have acted to prohibit one or more of the chemicals, no concerted action had been taken before the DEA order, and they remained legal in many areas.

The chemicals are now classified as Schedule I substances, according to a March 1 DEA press release. Schedule I substances are those that have "a high potential for abuse, no accepted medical use for treatment in the United States and a lack of accepted safety for use of the drug under medical supervision."

The ban will last for a year, but could be extended an additional six months. During that time, the agency will study the possibility of a permanent ban.

The temporary ban was first announced in November 2010.  At the time, The New York Times reported that it would take at least 30 days for the ban to take effect.

The full text of the final order from the DEA was published in theFederal Register on March 1.


Pot farm discovered inside Santa Ana warehouse

Category: News | Posted on Fri, March, 4th 2011 by THCFinder

Santa Ana police Friday were investigating a large and sophisticated marijuana growing operation found inside a warehouse they raided.

“There were four very large rooms of marijuana in varying stages of growth,” said police Cpl. Anthony Bertagna, referring to Thursday's discovery.

Police believe that every six weeks between $120,000 and $160,000 worth of pot was moved from the warehouse.

City records show that the last time the warehouse was licensed to be used as a legitimate business was in late 2009, Bertagna said.

“No other business was being run out of it at this time,” he said. “It was being solely used for the cultivation of marijuana.”

No arrests were made and an investigation was continuing.




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