Court Sides With IRS on 280E

A federal appeals court in California has ruled in favor of the 280E portion of the federal tax code, meaning marijuana companies will still have to battle one of the industry’s biggest challenges.

The 9th U.S. Circuit Court of Appeals ruled in a case involving a marijuana club called the Vapor Room, which claimed it was entitled to regular business expense deductions because it’s a legal company under state law.

The Internal Revenue Service, however, says that 280E prevents cannabis businesses from deducting expenses because marijuana is still federally illegal.

The court sided with the IRS and rejected the Vapor Room’s argument in a unanimous 3-0 decision. The judge said it’s up to Congress – not the courts – to change the laws on marijuana taxes.

The Vapor Room’s attorney, Henry Wykowski, noted that the decision was expected but said there’s a silver lining for the industry: The court upheld deductions for cannabis companies that deal in non-marijuana goods, such as the snacks and nonalcoholic drinks the club previously sold.

“From a tax perspective, this decision will benefit dispensaries that sell a variety of products including those that are not cannabis,” Wykowski said in an email to Marijuana Business Daily.

Aside from California, the court’s jurisdiction also includes Alaska, Arizona, Hawaii, Idaho, Montana, Nevada, Oregon and Washington.

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6 comments on “Court Sides With IRS on 280E
  1. Lyle Courtsal on

    WWWHHHOOOOOAAAA Fascist horsie; international law protects the right of individuals to determine beneficial medical efficacy. We have enough case studies to prove that medical beneficience. The Federal laws repressing cannabis are superceded by the international laws protecting patient rights. Finally, remember “recreational” uses can be medically classified at page A-Z medical index courtesy of Lester Grinspoon MD, author of Marijauna; The Forbidden Medicine. Love ya, Lyle Courtsal

  2. Josh on

    While I wholeheartedly want to see marijuana rescheduled, the court for once was right. Congress writes law. And a previous posters comment about international law superseding American law is facile and stupid and short sighted. We are not subjects of foriegn powers or the world, we are Americans first. I and most Americans will NEVER submit to foriegn laws or international tyranny. We have enough tryanny from our own government thank you.

  3. Jahpharmer on

    Well now…suppose the Vapor Room just gives away its cannabis along with each sale of rolling papers, etc.; i.e.: a pack of papers costs, say, $35 and with it you get a “free” eight.

  4. Rick Fague on

    As expected, 280E and the Federal government will be the last two pieces of the government to fall into place.

    And in the meantime, we should continue what we’re already doing, pushing for these archaic laws to change.

  5. John on

    Lyle, you are exactly right International law, weather you like it or not. We all already fall under this international law called the U.C.C. or Uniform Commercial Code.

    If you don’t know what this is it would be beneficial for everybody to take a few minutes and read up on the subject, The UCC supersedes ALL commercial and business law in the United States. If you become a Secured Party Creditor, under the rules of the UCC you have even more rights and benefits, than you can imagine.

    This is the law/code that multi billion dollar international company’s operate under. Do you think Walmart, home depot, target or any other big box store operates under the oppressive united states tax laws, hahaha hardly…

    We are all already subject to the UCC you might as well figure out how to use it to your advantage. I am, and have been for years, Usually I don’t share this information for free, but for the Cannabis industry, we need to take this to the next level, and the UCC is the next level….Unless you want to keep giving up all your profits to the IRS.

    By the way one more little tidbit of information for you before I go, the IRS was not created to tax us to death, they were created to pay our bills for us!!! Google, A4V, and H.J.R. 192, you will begin to understand what I am talking about, don’t be surprised when you find out just how deep the rabbit hole goes ….!!!! Take the red pill and see for yourself

  6. Jahpharmer on

    Yo!, John, and anyone else reading this,
    Words to the Wise:

    I first followed your advise and googled: Uniform Commercial Code, Secured Party Creditor, A4V, and HJR 192, and then spent much time reading through them all…then I clicked on “John” at the top of your comment…wow, what a crock of rabbit holes.

    “John”, you seem not to be a person but a website trying to sell us stuff…

    Seriously, the average and even advanced cannabis user, or grower, or business person, IMHO, should avoid this cluster-f**k for several reasons, mainly, the convolutions and contortions associated with all this will take-up so much time and brain power most of us will have not much left for much of anything else.

    I’ve several friends in Santa Cruz, California who attempted to use much of what your links lead to to fend-off County as it tried to impose growing restrictions (local ordinances)…they’ve all gone to jail while, in the mean time, County came in and cut down their plants…legally screaming all the way, to no avail…and two of them have had their lands confiscated under imminent domain…all for attempting to tie-up the county in red tape associated with all of what you recommend doing. NO THANK YOU.

    John, or who or whatever you are, I don’t doubt your intelligence, I even give you credit for being far-far more subtly intelligent than most of us, and, your sleuthing skills put Sherlock Holmes to shame; however, attempting such legal bantering with the levels of government that now surround us without first mastering the nuances of the complex levels within the UCC/Secured Party Creditor/IRS Law/A4V and HR 192, as well as President Roosevelt’s Executive Order 6102 will only piss-off those you’re trying to pull this off against, and if they have a badge, or a court room behind them you might find yourself in much, much more trouble than simply trying to avoid a obligation is worth.

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