Interesting article. IRS tells Fairfax medical

[Pacun]

IRS tells Fairfax medical marijuana dispensary it owes millions in unpaid taxes

The Internal Revenue Service has notified the Marin Alliance for Medical Marijuana in Fairfax that it owes millions of dollars in unpaid back taxes, according to the alliance's founder and director, Lynnette Shaw.

Shaw said the IRS audited the alliance's tax returns for 2008 and 2009 and disallowed all of its business deductions. She said that although dispensaries throughout the state are being audited by the IRS, the alliance is the first to be told it can't deduct business expenses.

"Every dispensary in the nation, past, present and future is dead if this is upheld," Shaw said.

Shaw would not disclose the exact amount she is being ordered to pay but said, "It's a staggering sum, millions and millions." She is also negotiating with the state Board of Equalization regarding sales tax that was not paid in 2005 and 2006.

Shaw said the IRS disallowed her deductions — for buying marijuana, hiring employees, securing office space and more — based on section 280E of the federal tax code, which states that no deduction shall be allowed for any business trafficking in controlled substances.

Under federal law, marijuana is classified as a schedule I controlled substance, a category of drugs not considered legitimate for medical use — despite voters' 1996 approval of Proposition 215, which legalized the use of marijuana for medical purposes in California.

[ILLMAS]

Wow, all these business pretty soon will be UP IN SMOKE!!!

[Catherine]

I see a Constitutional battle brewing founded in Amendments 9 & 10.

[BulldogTom]

I have been waiting for this to happen. I hope the IRS goes that route with every single one of them. Then I hope the government makes oxycontin a controlled substance as well so the IRS can do the same to all those "pain management" doctors who are peddling that as well.

It will be interesting to see who steps up and pays for the court case on this one. It has to go to court and be appealed. I am looking forward to seeing how it comes out.

Tom

Lodi, CA

[cred65]

You mean we get no deduction for dealing hippy lettuce?? What's up with that Dude.