The tea party has company. For the past several years, the Internal Revenue Service has been systematically targeting medical marijuana establishments, relying on an obscure statute that gives the taxing agency unintended power. The IRS has been functioning as an arm of justice, employing the U.S. tax code as a weapon in the federal government’s ongoing war against legal cannabis.
The majority of Americans favor legalization of marijuana, while 18 states and the District of Columbia have already legalized medical marijuana. But pot businesses in those states are vulnerable to the federal government’s strategic application of IRS Code Section 280E, a law enacted in 1982 after a drug dealer claimed his yacht and weapons purchases as legitimate business expenses — and long before medical marijuana was first legalized in California in 1996.
Now the IRS is applying a rule originally aimed at illegal (and often violent) drug trafficking to businesses that are entirely legal under their states’ laws. Medical marijuana dispensaries are facing audits and heavy tax bills that could force them out of business.
“Whether or not this is a coordinated tactic to try and shut down the industry, or send a chill through the industry, or if it’s just the IRS trying to collect as much revenue as they can from easy targets, it’s clearly outside the spirit and intent of the law,” said Kris Krane, a former executive director of Students for Sensible Drug Policy who now serves as principal of 4Front Advisors, a medical marijuana dispensary consulting firm.
– Read the entire article at The Huffington Post.