Court Sides With IRS Against Colorado Dispensary

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A Colorado cannabis business has lost a court battle that could have set an important tax precedent for the marijuana industry.

The Tenth Circuit Court of Appeals in Colorado rejected a request to overturn a ruling forcing a now-defunct dispensary to give the IRS information about its marijuana-related sales when seeking business deductions.

The court said it could not intervene in the dispute between the dispensary – Total Health Concepts – and the IRS, adding that it rarely gets involved in legal proceedings that are ongoing, according to Law360.

Further, the three judges on the court argued that Total Health could redress any damage caused by the IRS’ demands in an appeal of the final judgment.

The case goes back to May 2013, when the IRS asked the court to force Total Health to provide the information after the company’s owners invoked their Fifth Amendment rights against self-incrimination.

Total Health argued that its deductions should be allowed – like those of any other business – because the IRS doesn’t have the authority to determine if companies are involved with illegal substances.