February 2, 2012

Harborside Health Cannabis Dispensary Challenges $2.4 Million IRS Bill, Supports Marijuana Tax Reform

Image of Harborside Health Center

Harborside Health Center – the prominent medical cannabis dispensary in Oakland led by well-known pot activist Steve DeAngelo – announced today that it has filed a petition protesting the $2.4 million bill it received from the IRS for back taxes after a long, drawn-out audit.

Last year, the IRS ruled that the California dispensary owed taxes for standard business deductions it claimed several years ago, saying the company violates Section 280E of the tax code. The section in question was drafted nearly four decades ago to prevent illegal drug dealers from claiming business deductions on their sales.

The code has not been updated to reflect the recent rise of medical cannabis shops across the country. Sixteen states plus the District of Columbia now allow the use of medical marijuana, and many of them also allow MMJ to be sold at store-front locations.

Although the IRS did not contest Harborside’s accounting records or determine that it violated state medical cannabis laws, it essentially decided that Harborside falls under 280E because marijuana is still illegal federally.

The ruling was a major blow not only to Harborside but also to dispensaries across the United States. If medical marijuana businesses can’t claim tax benefits that every other type of company receives (such as rent, electricity and insurance), the industry could crumble.

DeAngelo equates 280E as a “dagger pointed at the heart of medical cannabis.”

“If the IRS is successful in denying all deductions, no cannabis dispensary will remain in busines,” DeAngelo said. “How much is it worth for patients to have the right to use a medicine, if there is no way for them to safely obtain it?”

In protesting the IRS decision, Harborside claims that it is operating under state laws and regulations that were passed by voters, and therefore it should be able to claim standard business tax breaks. The IRS has a few weeks to respond to Harborside’s protest.

The move comes as Harborside and several other medical marijuana businesses and organizations from 12 states gather support for a new group called the 280E Reform Team, which seeks to educate the public about the tax issue.

The team, which includes dispensary owners, health support groups and pot activists, is calling for the IRS to stop “attacks” on legally operating medical marijuana businesses in the United States. In the coming months, the group will hold workshops for medical cannabis professionals and their accountants, educating them on tax topics pertinent to MMJ. The group also eventually hopes to bring about legislative reform for the marijuana industry.

The 280E Reform Team is now seeking  volunteers and small donations to support its work.

 

 

 

 

 

Post Your Comment:


Please note:
Comments are moderated by our editors who do their best to approve comments ASAP. As Marijuana Business Daily is focused on business, we approve comments that are specifically relevant to industry professionals. General opinions and questions about cannabis may not be posted.

Arizona Businesses, Advocates Unite Behind Single MJ Measure

The formerly fractured Arizona marijuana community emerged as a united front on Friday, with representatives [click to continue...]

Heads of Illinois, New Jersey Medical Cannabis Programs Step Down

resignation letter

Medical marijuana programs in two states are looking for new leaders. Bob Morgan, the coordinator [click to continue...]

2 Marijuana Measures Filed for 2016 Ballot in California

A pair of proposed 2016 ballot measures tied to cannabis have been filed with the [click to continue...]

Gupta: U.S. Needs Medical Marijuana ‘Revolution’

CNN’s chief medical correspondent Sanjay Gupta gave the medical marijuana industry another shot in the [click to continue...]

National Association for Cannabis Lawyers to Launch

marijuana lawsuit

Two California lawyers have teamed up to start the National Cannabis Bar Association, with the [click to continue...]

Union Nixes Attempt to Organize Workers at NJ Dispensary

Marijuana businesses hoping for some potential legal guidance on unionization from a case in New [click to continue...]

CA Judge Won’t Reschedule Marijuana

A federal judge in California on Wednesday declined to overturn marijuana’s place on the Drug [click to continue...]

Bill Rolling Washington MMJ Into Recreational Program Advances

WashingtonCannabis

Washington State Gov. Jay Inslee will likely sign a bill passed by the Legislature that [click to continue...]

New Jersey Dispensary in Labor Dispute Turned Away By Law Firm

Some attorneys still won’t touch the cannabis industry, it seems. David Knowlton, co-founder of the [click to continue...]

Delaware’s 1st Dispensary Delayed Again, Set For June Opening

The opening of Delaware’s first and only MMJ dispensary has been delayed again, but this [click to continue...]

Millions More Devoted to New York MMJ Industry

NewYorkMedicalMarijuana

Even though New York hasn’t even begun issuing business licenses yet for medical marijuana companies, [click to continue...]

Illinois Gov Won’t Extend MMJ Pilot Program Yet

In response to attempts by lawmakers to extend the timeline for the state’s medical cannabis [click to continue...]

Filings Show Many Banks Working With Cannabis Businesses

Banks have filed more than 1,700 so-called “marijuana limited” suspicious activity reports since the federal [click to continue...]

New Doctor Requirement Could Dampen Arizona’s MMJ Market

arizona medical cannabis

Arizona dispensaries could see fewer new patients after the state’s governor signed a bill forcing [click to continue...]