A medical cannabis dispensary in Denver lost an appellate court battle to prevent the IRS from obtaining business records from state regulators.
The U.S. Court of Appeals for the 10th Circuit ruled that an IRS auditor did not act in a way that was “overbroad” or “violated the rights” of the four owners of Standing Akimbo, Colorado Politics reported.
The IRS had sought the dispensary’s business records from the Colorado Marijuana Enforcement Division as part of an audit.
The IRS was seeking to find out if Standing Akimbo had claimed business-expense deductions. Because marijuana remains federally illegal, such deductions are not allowed.
The plaintiffs, according to Colorado Politics, unsuccessfully argued:
- The IRS exceeded its authority by allegedly investigating drug crimes.
- Their Fourth Amendment privacy rights were being violated.