The IRS War on Medical Marijuana Providers [FEATURE]

special to Drug War Chronicle by investigative reporter Clarence Walker, [email protected]

Dispensaries providing marijuana to doctor-approved patients operate in a number of states, but they are under assault by the federal government. SWAT-style raids by the DEA and finger-wagging press conferences by grim-faced federal prosecutors may garner greater attention, but the assault on medical marijuana providers extends to other branches of the government as well, and moves by the Internal Revenue Service (IRS) to eliminate dispensaries' ability to take standard business deduction are another very painful arrow in the federal quiver.

The IRS employs Section 280E, a 1982 addition to the tax code that was a response to a drug dealer's successful effort to claim his yacht, weapons purchases, and even illicit bribes as business expenses. Under 280E, individuals involved in the illicit sale of controlled substances -- including marijuana, even medical marijuana in states where it is legal -- cannot claim standard business expenses on their federal taxes.

"The 280E provision which requires certain businesses to pay taxes on their gross income, as opposed to their net income, is aimed at shutting down illicit drug operations, not state-legal medical marijuana dispensaries," said Kris Hermes, spokesman for the medical marijuana defense group Americans for Safe Access." Nonetheless, the Obama Administration is using Section 280E to push these local and state licensed facilities out of business."

The provision can be used to great effect. Oakland's Harborside Health Center was hit with a $2 million IRS assessment in 2011 after the tax agency employed Section 280E against. Harborside is fighting that assessment, even as it continues to try to fend off federal prosecutors' attempts to shut it down by seizing the properties it leases. Similarly, when the feds raided Richard Lee's Oaksterdam University that same year, it wasn't just DEA, but also IRS agents who stormed the premises. Lee said it was because of a 280E-related audit.

The attacks on Harborside and Oaksterdam were part of an IRS campaign of aggressive audits using 280E to deny legitimate business expenses, such as rent, payroll, and all other necessary business expenses. These denials result in astronomical back tax bills for the affected dispensaries, threatening their viability -- and patients' access to their medicine.

"Should the IRS campaign be successful; it will throw millions of patients back in to the hands of street dealers; eliminate tens of thousands of well paying jobs, destroy hundreds of millions of dollars of tax revenue; enrich the criminal underground; and endanger the safety of communities in the 17 medical cannabis states," said Harborside's Steve DeAngelo as he announced the 280E Reform Project to begin to fight back.

It's going to be an uphill battle. In the last Congress, Rep. Pete Stark (D-CA) introduced House Bill 1985, the Small Business Tax Equity Act, designed to end the 280E problem for medical marijuana businesses, but it went to the Republican-controlled House Ways and Means Committee, where it was never heard from again.

Still, something needs to happen, said Betty Aldworth, deputy director of the National Cannabis Industry Association, which this year is working with members of Congress to try to find a fix for the 280E problem.

"When Section 280E was created in the 1980s, no one imagined state-legal marijuana providers," Aldworth told the Chronicle. "Whether or not it is part of a larger effort to curtail the development of regulated models for providing marijuana, which is a model that is clearly preferable to leaving this popular and relatively safe medicine (or adult product) in the underground market, these onerous tax rates have severely hampered the development of the regulated market."

It's a brake on the overall economy, Aldworth said.

"Not only has it resulted in stymieing job development, but it also curtails other economic activity such as reinvestment in business and the rippling positive effects of that spending," she argued. "And in many cases, it has created a tax burden that is simply unbearable: many providers have had to close their doors and lay off their staffs because the tax burden was simply too great."

Because of this unintended application of 280E, medical marijuana providers are paying overall taxes at a rate two to three times those of other small businesses, Aldworth said.

"It's important to note that just as they want to apply for licenses, follow regulations, and otherwise participate in the legal business community, state-legal marijuana providers also want to pay their fair share of taxes," she pointed out. "Most small businesses pay an effective tax rate of between 13% and 27% on net income, according to the Small Business Administration. State-legal marijuana providers pay an average effective tax rate of 65-80%. An industry that can provide thousands of jobs is being held back by these crazy tax rates."

While the lobbyists look to Congress for a fix, one academic tax law expert thinks he has hit upon a novel solution, but not everyone agrees.

Benjamin Leff, a professor at American University's Washington College of Law, raised eyebrows at a Harvard University seminar this spring when he presented his report,Tax Planning For Marijuana Dealers, where he suggested that dispensaries get around 280E by registering with the IRS as tax-exempt social welfare organizations, known as 501(c)(3)s or 501(c)(4)s.

The IRS has already ruled that medical marijuana providers can be exempt under 501(c)(3) because its "public policy doctrine" does not allow charitable organizations to have purposes contrary to law, but in the paper, Leff argued that "a state-sanctioned marijuana seller could qualify as tax-exempt under 501(c)(4), since the public policy doctrine only applies to charities, and 501(c)(4) organizations are not charities."

The organization would have to be operated to improve the social and economic conditions of a neighborhood blighted by crime or poverty, by providing job training, employment opportunities, and improved business conditions for commercial development in the neighborhood, just like many existing community economic development corporations that run businesses.

"When taxes get too high, you can drive compliant dispensaries out of business," Leff told the Chronicle.

Americans for Safe Access' Hermes would agree with that, but he's not so sure about Leff's idea.

"The concept of medical marijuana dispensaries registering with the federal government as a 501(c)(4) in order to sidestep section 280E is novel and may be hypothetically valid," he said. "However, the IRS will refuse to grant tax-exempt status to a business that the agency believes is violating federal law. Perhaps, it would be possible for a dispensary to obtain 501(c)(4) status under false pretenses, but such status would not very likely withstand an IRS audit."

There are better ways, he said.

"A much more realistic and sensible approach -- pending a change to the federal classification of marijuana for medical use -- is to amend the tax code to exclude state-lawful medical marijuana businesses from Section 280E," Hermes recommended. "This is the kind of legislation that Congress should pass in order to allow states to implement their own medical marijuana laws, without undue interference by the federal government."

"I agree with everything he said," Leff replied. "But it's not just the Obama administration that is using 280E this way. The Supreme Court has held that there is no exception to the Controlled Substances Act for state-level legal marijuana sales, and since 280E makes references to Schedule I controlled substances, it applies to legal marijuana unless Congress changes the law. I totally agree that Congress should amend 280E to exempt marijuana selling that is legal under state law. Congress could also amend the Controlled Substances Act to remove marijuana from it, which would probably also make sense," he added.

Whether it is by act of Congress, internal policy shifts, or creative thinking by law school professors, some way has to be found to exempt state-permitted medical marijuana providers from the clutches of 280E and its punitive tax burden aimed at dope dealers, or there may not be any medical marijuana providers.

Permission to Reprint: This article is licensed under a modified Creative Commons Attribution license.
Looking for the easiest way to join the anti-drug war movement? You've found it!

Kottayam Escorts

You Can Get Lovely Call Girls From Our Site And Can Enjoy Your Night With Them.

Mumbai Escorts

Welcome to the beautiful world of Mumbai Escorts Service. Here you will get the very sexy and hot Call Girls in Mumbai who are expected such a great amount to being physical with you. Truly, it is actual simply meet our young ladies, they are standing by to offer unusual help to you. Mumbai Escorts is offering such excellent and famous models common 24x7 hours for you. Mumbai Escorts Services: Mumbai Escorts | Mumbai Call Girls | Mumbai Call Girls Photo | Mumbai Cheap Call Girls | Mumbai Escorts Blog | Mumbai Call Girls Phone Number  Mumbai Escorts Locations: Andheri Call Girls | Bandra Call Girls | Vashi Call Girls | Mira Road Call Girls | Thane Call Girls | Juhu Call Girls | Navi Mumbai Call Girls  Mumbai Escorts Categories: Whatsapp Sex Chat With Mumbai Girls | Housewife Escorts Mumbai | Muslim Call Girls | Russian Escorts Girls in Mumbai | Actress Escorts in Mumbai | Marathi Call Girls | Mumbai Call Girls Near Me | Vergin Call Girls Mumbai | College Girl Escorts Mumbai  Other Escorts City: Ahmedabad Call Girls | Ranchi Call Girls

Delhi escorts agency

Like a Nymph, I have tender and loving natures that convey smile on individuals confronts wherever she goes, Delhi escorts. If you are feeling sad, discouraged for some personal and also professional reasons, then I am the right girl for you who will carry back smile on your miserable face through my minding nature and delicate adoration making qualities at night. I am like a tomboy and find adoration playing tricks with boys, since my guardians have a place with modest foundation; I have to choose to strengthen myself by being an Independent Delhi Escorts.

I cherish consideration of men when they spoil me with surprises, costly attires and give tender kisses through and through in night making me a complete lady. I look like nearby girl, sweet honest girl whom you might want to acquaint with your folks to get marriage. In any case, more pure I look more I am wild catlike in bed who will scratch your back when you embed your hard inside me, Escorts in Delhi. I am sensible, have good stature of 5’7” and inclination toward wearing ultra modern and sexy dresses but to wear jeans top on initial meetings.

Normally, I don’t love drinking but sometime indulge myself in some cocktails, if you used to drink. I request you not to spoil your night in excessive drinking. If you need it we both can have little-little. That is the most essential precept of booking my Delhi Escorts Services. In fact Smoking and drinking is not a good thing since it truly leaves a spoiled odor in my mouth when you kiss me or have intercourse.

I keep myself fit through playing games; I am an athletic champion, likewise play tennis, badminton to keep up my very much conditioned body, Delhi model escorts. Being in association of young men, I know the amount of weight men face from society and folks to accomplish something in life. In the first place it is imprints, then great job, then great position, it's a ceaseless rivalry for men and on the off chance that they are not ready to accomplish they are considered washouts, Delhi premium escorts.

That is the reason you see such a large number of men discouraged, despondent and now and again they submit suicide as well. Please don’t ever thing for such miserable things, never forget your true Independent Delhi Escort friend in available at very cheap rates whenever you feel need for her. visit.

free classified ads

Ads Linker is free classified ads posting website in Pakistan. Quickly growing platform for buying and selling goods. We ensure users friendly ...Below, we listed free ads posting sites in Pakistan. We regularly update the list and if you think we missed any better Classified site, Please do let us ...

Nuru massage

People used to travel abroad for high end massage. Imagine the kind of money one had to invest but with Body to body massage in your city, you can experience the same in your own city. One such spa is sweety massage who is known for rendering some of the best quality massage. Visit https://www.spasweety.com/

 I am very happy that this

 I am very happy that this website works and that your post really helped me. Perhaps I will take up your home tips you provided. Perhaps a visit from a guest would be a good idea.  ipad repair dubai

Thank you for this. I am

Thank you for this. I am really impressed by the blog you've created and I wish you all the best success with your blog!   handyman services in dubai

Beautiful Pets Animal

Everyone always had a liking towards animals. Any animal is kept by human beings as a source of companionship and pleasure. They are full of fur & like softballs. They are googly innocent eyes show the love & warmth they have in them.

 

____________________________/SOCIAL LINKS\__________________________________

YouTube:➤ https://www.youtube.com/channel/UCGi4z3JhIDJFE14or7pztJw

 

Beautiful Pets Animal

Everyone always had a liking towards animals. Any animal is kept by human beings as a source of companionship and pleasure. They are full of fur & like softballs. They are googly innocent eyes show the love & warmth they have in them. ____________________________/SOCIAL LINKS\__________________________________YouTube: ➤ https://www.youtube.com/channel/UCGi4z3JhIDJFE14or7pztJw

Mandya Escorts

A joyful night was spent with a very beautiful Russian girl who is a Call Girl that provides you services for making you satisfied.

Delhi celebrity escorts

Delhi is a city with a long and rich history, and it's no surprise that it's also home to some of the most beautiful and exotic women in the world. Russian women are renowned for their beauty, and there are plenty of them working as escorts in Delhi. If you're looking to book one of these lovely ladies, there are a few things you need to know. First off, it's important to be respectful when dealing with Delhi Russian escorts. These women are providing a service, and they deserve to be treated with dignity and respect. That means no haggling over prices, no disrespecting them verbally or physically, and no trying to take advantage of them in any way. Secondly, make sure you're aware of what you're paying for. Most Delhi Russian escorts will offer both in-call and out-call services, but not all of them will offer sex without protection. If you're planning on having unprotected sex, make sure that's something that's explicitly on the table before you book an appointment.Finally, be prepared to pay upfront. Many Delhi Russian escorts operate on a cash-only basis, so make sure you have the appropriate amount of money before you meet up with your chosen lady. With these tips in mind, booking a Delhi Russian escort should be a breeze!

Visit our other categories service: - Aerocity Housewife escorts

Aerocity Russian escorts

Delhi Housewife escorts

Book Now Delhi Escorts

An online search for Delhi Escorts is a perfect way of making sure that you will receive a popular type of Hot Escorts service. This escort agency has trained all the hot beauties a lot. Making sure that you will receive everything your body is asking for.

Post new comment

The content of this field is kept private and will not be shown publicly.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd> <i> <blockquote> <p> <address> <pre> <h1> <h2> <h3> <h4> <h5> <h6> <br> <b>

More information about formatting options

CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

Drug War Issues

Criminal JusticeAsset Forfeiture, Collateral Sanctions (College Aid, Drug Taxes, Housing, Welfare), Court Rulings, Drug Courts, Due Process, Felony Disenfranchisement, Incarceration, Policing (2011 Drug War Killings, 2012 Drug War Killings, 2013 Drug War Killings, 2014 Drug War Killings, 2015 Drug War Killings, 2016 Drug War Killings, 2017 Drug War Killings, Arrests, Eradication, Informants, Interdiction, Lowest Priority Policies, Police Corruption, Police Raids, Profiling, Search and Seizure, SWAT/Paramilitarization, Task Forces, Undercover Work), Probation or Parole, Prosecution, Reentry/Rehabilitation, Sentencing (Alternatives to Incarceration, Clemency and Pardon, Crack/Powder Cocaine Disparity, Death Penalty, Decriminalization, Defelonization, Drug Free Zones, Mandatory Minimums, Rockefeller Drug Laws, Sentencing Guidelines)CultureArt, Celebrities, Counter-Culture, Music, Poetry/Literature, Television, TheaterDrug UseParaphernalia, Vaping, ViolenceIntersecting IssuesCollateral Sanctions (College Aid, Drug Taxes, Housing, Welfare), Violence, Border, Budgets/Taxes/Economics, Business, Civil Rights, Driving, Economics, Education (College Aid), Employment, Environment, Families, Free Speech, Gun Policy, Human Rights, Immigration, Militarization, Money Laundering, Pregnancy, Privacy (Search and Seizure, Drug Testing), Race, Religion, Science, Sports, Women's IssuesMarijuana PolicyGateway Theory, Hemp, Marijuana -- Personal Use, Marijuana Industry, Medical MarijuanaMedicineMedical Marijuana, Science of Drugs, Under-treatment of PainPublic HealthAddiction, Addiction Treatment (Science of Drugs), Drug Education, Drug Prevention, Drug-Related AIDS/HIV or Hepatitis C, Harm Reduction (Methadone & Other Opiate Maintenance, Needle Exchange, Overdose Prevention, Pill Testing, Safer Injection Sites)Source and Transit CountriesAndean Drug War, Coca, Hashish, Mexican Drug War, Opium ProductionSpecific DrugsAlcohol, Ayahuasca, Cocaine (Crack Cocaine), Ecstasy, Heroin, Ibogaine, ketamine, Khat, Kratom, Marijuana (Gateway Theory, Marijuana -- Personal Use, Medical Marijuana, Hashish), Methamphetamine, New Synthetic Drugs (Synthetic Cannabinoids, Synthetic Stimulants), Nicotine, Prescription Opiates (Fentanyl, Oxycontin), Psilocybin / Magic Mushrooms, Psychedelics (LSD, Mescaline, Peyote, Salvia Divinorum)YouthGrade School, Post-Secondary School, Raves, Secondary School