Congress Critters Seek IRS Clarification

November 30, 2010

...And the hits just keep coming!

Despite the DOJ memo and our best efforts the federal government continues to engage innovative tactics to continue their campaign of interference with state medical marijuana laws.   The latest tactic is to use an antiquated tax code to prohibit medical marijuana dispensing facilities from taking IRS deductions and credits attributed to amounts paid or incurred during the taxable year. ASA has confirmed that several medical cannabis collectives in California are now being (and have in the past been) targeted by this very law under the guise of federal tax audits.  These “audits” seem to be unfairly applied, especially as they appear to target the largest collectives serving the greatest percentage of the population.

For the patients  who rely on the access to medicine these collectives provide, enforcement of this provision could result in a number of unanticipated consequences.  Without doubt, collectives will be forced to raise the cost of medicine and services in order to compensate for the loss of a deduction/credit.  It’s possible that some collectives may simply stop filing federal tax returns, which may jeopardize the integrity of the collective and put patients in harm’s way.  And, in the worst case, collectives will simply shut their doors, forcing what are otherwise well regulated facilities back to the underground.

To combat this issue ASA has enlisted the leadership of Congressman Pete Stark (D-CA), known as one of the nation's foremost advocates of tax reform.  Mr. Stark has championed a “Request for a Revenue Ruling on Allowing Legal Marijuana Dispensaries to Take Trade or Business Deductions.”   Mr. Stark and a handful of Congressional colleagues who also serve as senior members of the relevant oversight committees including Ways & Means, Joint Taxation, Banking, and Judiciary have cosigned a letter requesting that the IRS issue a revenue ruling - or similar pronouncement upon which all taxpayers may rely - concerning deductions for medical marijuana dispensaries.

The Revenue Request represents an initial step toward a final solution and ASA will continue our dialogue with Congress and Administration officials about this issue.   These ongoing and indirect tactics underscore a need for Congress to provide a solution to the growing divide between state and federal laws concerning the use of marijuana for medical purposes.  In the meantime, PLEASE visit the following webpages and offer these allies your personal thanks and sincere appreciation for their leadership on this important issue.

Congressman Pete Stark (D-CA/13) Congressman Sam Farr (D-CA/17) Congressman Raul Grijalva (D-AZ/7) Congressman Barney Frank (D-MA/4) Congresswoman Linda Sanchez (D-CA/39) Congressman Jared Polis (D-CO/2)
A senior member of the powerful Ways and Means Committee, he is currently the Chairman of its Health Subcommittee.

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