CA Congressman Stark Pushes Back on IRS
October 06, 2011 | Don Duncan
[caption id="attachment_1949" align="alignnone" width="180" caption="Congressman Pete Stark"][/caption]
The Internal Revenue Service (IRS) is playing hardball with medical cannabis providers in California and Colorado, and Congressman Pete Stark (D-CA) is moving to stop them. Using a provision of federal law adopted to fight large-scale drug trafficking, the IRS is disallowing tax deductions for ordinary business operating expenses like payroll, rent, and insurance. The result is a massive tax burden for providers – making it essentially impossible to operate. Congressman Stark explains why the IRS tactic is bad for patients and unfair:
We need to fix the tax code so that medical marijuana dispensaries may operate like the legitimate businesses that they are. If they cannot take the deductions allowed to every other legal business, the medical marijuana industry will cease to exist and patients will suffer. It seems ridiculous that we'd go after these dispensaries, which help people manage illness, when companies including Exxon, which pollutes the air, effectively paid no taxes last year. Our priorities need adjusting and our tax code needs an update, which is why I introduced the Small Business Tax Equity Act.
Congressman Stark’s bill, HR 1985, would exempt medical cannabis providers who are operating legally under their state’s law from a provision in Title 26 of the US Code, which forbids tax deductions for expenses incurred in “trafficking in controlled substances.” Congressman Stark recognizes that this section of the US Code was never intended for legitimate, state-sanctioned medical cannabis programs. Americans for Safe Access (ASA) is supporting HR 1983 in hopes of protecting patients’ access in every state where it is already legal.
Disallowing ordinary business deductions is just one more tactic the federal government is using in an effort to roll back medical cannabis. The Drug Enforcement Administration (DEA) continues to raid providers. Banks are under federal pressure to close medical cannabis accounts, and federal officials just seized accounts in Sacramento. And now the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) is getting in the game. That agency recently decreed that medical cannabis patients cannot own guns or ammunition!
Federal intimidation is the primary impediment to fully implementing state medical cannabis laws. We cannot have a well-regulated, transparent medical cannabis program until the federal government and agencies step back and let the states do their jobs. Congressman Stark’s HR 1985 is a step in that direction. Medical cannabis advocates should support HR 1985 and other new federal legislation, so that we can finally put a stop to the federal interference.