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!

03222030055 Provide Call Girls in Hotel Creek

Call Girls in Karachi By is a personal blog that captures life stories of women who make their living through prostitution and sex work in Karachi and other parts of Pakistan. It also looks at various topics such as sex education, sexual pleasure and rights, violence against women, and sex trafficking. Call girls are a specific type of sex worker who primarily operates in the red-light districts of major cities. They provide either sexual services or romantic companionship to clients. Consequences for call girls vary from city to city and from country to country.

VIP Karachi Call Girls Ads By

Pakistan is a country where prostitution is illegal. However, the country's social dynamics have made it a still-prevalent profession. It is estimated that Karachi has at least 5,000 call girls in its sex industry. It is an unregulated and hidden industry with no health standards or regulations. It fuels the country's economy by generating income from prostitution and contributes to the lack of public awareness of sexual health issues. The popularity of Call Girls in Karachi increased after the liberalization process in the 1990s. There was a surplus of sex workers following the nuclear program, which stopped immigration from neighboring countries and created a free market for women.


Karachi is the most populous city, with a population of approximately 25 million people. But the city is also known for its high sexually transmitted diseases and prostitution rate. In 2017, a group of VIP Karachi Escorts launched a call-girl service to combat the shortage of foreign workers. The service has been well-received by customers looking for these girls' services.


Three Karachi teenagers conceived the idea in 2017 after witnessing an influx of foreigners coming to work in their city. Three years ago, an empty piece of land was changed into a building hosting hundreds of call girls - which is why they decided to take it upon themselves and start one themselves. The Escorts in Karachi provide their services on a per-hour basis. Prices depend on how long the customer wants the girl to spend with them and how much they want to pay daily. Customers can also choose their preferred girl from their website and are charged accordingly.


The term "Females Escorts in Karachi" is a broad term with many meanings. It may refer to female sex workers, or it might refer to the females who work in a certain profession. A Karachi call girl is someone who offers companionship on the phone for money but does not offer sexual services in person. The word "Call Girl" is a term that is used to describe an underage girl who provides sexual services for money. This article talks about the ethical dilemmas of being a Call Girl in Karachi and what factors determine whether you go into the industry or not.


Pakistan has emerged as one of the world's top providers of female escorts, with nearly 200,000 women estimated to work as sex workers in 2017 alone. is an online platform that offers women access to the Karachi nightlife. They are professional younger girls who are willing to provide companionship and care. They have different rates for different time frames, as well as for various activities.


This online platform connects every female interested in seeking companionship with Karachi's elite. It is estimated that it has over 1000 members from different areas of the world, such as the US and UK, who are looking for a discreet encounter with a beautiful woman from Karachi. "Karachi call girls by VIP call girls in Karachi" is a website where girls from the city of Karachi show their pictures and videos of what they have to offer.


This website has various sections, including "Karachi Call Girls," "Pakistani Girls," and "Indian Girls." All types of girls can be found here; they are always ready to help with their services. In addition, the website has an online chat service for its users to engage in conversations with them and get more information about the services they offer.

We hope you enjoyed this introduction!


Call Girls in Karachi

Karachi Call Girls

Females Escorts in Karachi

Call Girls in Islamabad

Lahore Escorts Services

Call Girls Escorts in Karachi

Karachi Call Girls

VIP Escorts in Karachi

VIP Karachi Escorts

Independent Escorts in Karachi

Escorts Services in Karachi

VIP Call Girls in Karachi

Model Escorts in Karachi

Cheap Call Girls in Karachi

Call Girls in Islamabad

Call Girls in Islamabad

Call Girls Escorts in Islamabad

Call Girls in Karachi

Call Girls in Karachi

Call Girls in Islamabad

Call Girls in Karachi


Jaipur Escort Service Classic -Profile VIP High Models

Hey Welcome To Jaipur Escort Guys Enjoy This With Female Call Girl Of Your Life With New And The Best Life Moment, Live You If You Have Any Kind Of Problem If You Book The Site On Our Escort Service Agency And Which Is Given Jaipur Escort Service Website In this, you will see many call girl service profiles, you can get a chance to choose more than 100 call girls, along with our escort agency frameless will make you enjoy life that you would have never done, with you get every type of female. Can escort Se.Beautiful hot-classic profile Jaipur escort you can get best and hot sexy from this you our sexy call girl can destroy your desire and sex you can get this .

Escort IN Bareilly Best Agency Hot Girls Services

Bareilly Escort Service but you live somewhere else and you can't come this If you can, you will get our more escort agency in every city and state, you can find it on google of our website, wherever you live, book the site and choose your favorite call girl, you can enjoy life and night, your alone Feeling away and who enjoys sex.You will love the best service of female and also you will book Bareilly escort site again and again, on this you can find service of college and school and girls of all age on it also open 365 days and 9 to 4 hrs. Rahat but you can also get night service from 8 pm to night with year offers, enjoy your life wonderful, fun and sexy with female. You get escort service with room on it with best service, you can check on site and you will get this facility in any way.

Here at Barmer Escorts every service is available to yous

Explorer real Barmer beauty for as long as you desire. Barmer Escorts You can fulfill different fantasies that you might have seen on the TV participating different ladies from the states. They look like models, but their moves are even more astonishing. Any oral sex, simple body massage or anything else that you want will feel much better than you ever wanted with great ladies for your personal fun. They also offer to be enjoyed for couples, or you can mix them with some other Jaipur escorts that are willing to double the intimate fun. Any of call girls is ready to show something that you haven’t done before. You can always feel delighted with our professional Barmer call girls in UAE. They will make you feel like in an entirely new level of satisfaction with some domination or submission.

Lovely Sexy Models by Bastar Escort Fantastic Services

We offer the best World Trade Center Bastar Escort call girls and their playful attention and solution to make the best fun whenever you need to have an enjoyment of the city. Some might prefer some lovely GFE Umm Suqueim girl for some romantic date. The diverse character offers numerous exciting choice whenever there is a desire to have some more intimate sensations. If you are near Oasis Beach Tower or some other place near the Arabic Gulf, The Springs girl will be the right selection. You will make the best enjoyment for your intimate desires 24/7 also with The Hills women who would like to be into a threesome. We can assure that also The Gardens lady near the coast can make some great experiences. You can get full hands-on experience without planning or force anything. Tecom escorts are also experts in numerous fun things. For some Sheikh Zayed Road, a girl can also provide an exquisite pleasure near the hotel suite.

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

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