February 2, 2012

Harborside Health Cannabis Dispensary Challenges $2.4 Million IRS Bill, Supports Marijuana Tax Reform

Image of Harborside Health Center

Harborside Health Center – the prominent medical cannabis dispensary in Oakland led by well-known pot activist Steve DeAngelo – announced today that it has filed a petition protesting the $2.4 million bill it received from the IRS for back taxes after a long, drawn-out audit.

Last year, the IRS ruled that the California dispensary owed taxes for standard business deductions it claimed several years ago, saying the company violates Section 280E of the tax code. The section in question was drafted nearly four decades ago to prevent illegal drug dealers from claiming business deductions on their sales.

The code has not been updated to reflect the recent rise of medical cannabis shops across the country. Sixteen states plus the District of Columbia now allow the use of medical marijuana, and many of them also allow MMJ to be sold at store-front locations.

Although the IRS did not contest Harborside’s accounting records or determine that it violated state medical cannabis laws, it essentially decided that Harborside falls under 280E because marijuana is still illegal federally.

The ruling was a major blow not only to Harborside but also to dispensaries across the United States. If medical marijuana businesses can’t claim tax benefits that every other type of company receives (such as rent, electricity and insurance), the industry could crumble.

DeAngelo equates 280E as a “dagger pointed at the heart of medical cannabis.”

“If the IRS is successful in denying all deductions, no cannabis dispensary will remain in busines,” DeAngelo said. “How much is it worth for patients to have the right to use a medicine, if there is no way for them to safely obtain it?”

In protesting the IRS decision, Harborside claims that it is operating under state laws and regulations that were passed by voters, and therefore it should be able to claim standard business tax breaks. The IRS has a few weeks to respond to Harborside’s protest.

The move comes as Harborside and several other medical marijuana businesses and organizations from 12 states gather support for a new group called the 280E Reform Team, which seeks to educate the public about the tax issue.

The team, which includes dispensary owners, health support groups and pot activists, is calling for the IRS to stop “attacks” on legally operating medical marijuana businesses in the United States. In the coming months, the group will hold workshops for medical cannabis professionals and their accountants, educating them on tax topics pertinent to MMJ. The group also eventually hopes to bring about legislative reform for the marijuana industry.

The 280E Reform Team is now seeking  volunteers and small donations to support its work.

 

 

 

 

 

Post Your Comment:


Please note:
Comments are moderated by our editors who do their best to approve comments ASAP. As Marijuana Business Daily is focused on business, we approve comments that are specifically relevant to industry professionals. General opinions and questions about cannabis may not be posted.

Another Nat’l Poll Finds Majority of Americans Favor Legalization

Some more good news for cannabis activists and businesses: A respected national poll taken every [click to continue...]

Insurance Firms Urged to Craft MJ Policies

marijuana insurance

Mainstream insurance companies should start crafting policies to cover legal marijuana businesses as the industry [click to continue...]

DC Bans Consumption at Private Clubs

In a bid to curtail premature business opportunities tied to recreational marijuana, city leaders in [click to continue...]

$36 Million Raised for Ohio MJ Legalization

A group in Ohio¬†has already raised $36 million for a proposed ballot measure that would [click to continue...]

PharmaCann Poised to Hold Most IL Licenses

illinoismedicalmarijuana

After a medical marijuana company abandoned its cultivation license on Monday in an area west [click to continue...]

WA Could Outlaw Marijuana Vending Machines

Washington State entrepreneurs hoping to sell marijuana through vending machines or drive-up windows took a [click to continue...]

Cannabis Producers Have New Worry: Stoned Rabbits

Cannabis businesses face opposition from anti-marijuana advocates worried about the drug falling into the hands [click to continue...]

Nevada Senator: Secrecy in MMJ Licensing Process a ‘Disaster’

Las Vegas MMJ

Nearly 40% of the 519 businesses that applied for medical cannabis business licenses in Nevada [click to continue...]

Florida’s Second Stab at CBD Rules Questioned

Florida is having a hard time figuring out rules for its CBD industry. The state [click to continue...]

Maine Medical Cannabis Sales Total $16.2M

Dispensaries in Maine sold an estimated $16.2 million worth of medical cannabis last year, while [click to continue...]

Oregon Agency Weighs in on MMJ, Rec Rules

Oregonoutline

Oregon could keep medical marijuana completely separate from recreational cannabis when retail sales begin next [click to continue...]

Missouri Awards Hemp Cultivation Licenses

Missouri has joined the growing number of states legalizing CBD-based medicines. The state awarded cultivation [click to continue...]

150K Pounds of Legal Marijuana Sold in CO Last Year

Dispensaries and retail cannabis stores in Colorado sold nearly 150,000 pounds of marijuana flower last [click to continue...]

Medical Cannabis Demand Outweighing Supply in DC

supply and demand

Recreational marijuana has dominated headlines out of Washington DC this week, as the use, possession [click to continue...]