Sacramento Dispensary Challenging IRS

Sacramento’s Canna Care dispensary is battling the Internal Revenue Service over the agency’s controversial 280E tax code, which has become a major thorn in the side of cannabis businesses.

According to the IRS, Canna Care owes $873,167 in back taxes for 2006, 2007 and 2008. The hefty tax bill comes after the IRS refused to accept $2.6 million in deductions for salaries, rent and other costs the dispensary claimed over that time period.

The agency tied its decision to 280E, which denies a host of common tax deductions for businesses that trade in illegal drugs.

The dispensary’s owners said the IRS offered to accept a settlement fee of $100,000 to end the case. But they decided not to pay the fee and instead will argue their case before a U.S. Tax Court in San Francisco on Feb. 24, saying they hope to raise awareness about the plight of cannabis businesses.

The dispensary’s attorney, Spencer Malysiak, argues that the IRS is violating the Equal Protection Clause of the U.S. Constitution.

Canna Care reportedly generates $2 million a year in cannabis sales, and the dispensary operates as a non-profit.

Its owners take home a combined $175,000 each year in salaries, and they pay their 12 employees between $30,000 and $40,000 a year. Employees also receive health benefits.

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4 comments on “Sacramento Dispensary Challenging IRS
  1. Fonzie on

    “I’ll take what’s behind door number two, Monty…”

    Though I admire the drive of Canna Care’s owners to change the system, I still feel like they should’ve taken the $100k offer by the IRS. That sounds like a sweetheart deal, but maybe I’m wrong?

  2. Kevin Spence on

    Sometimes it’s the principle of the issue. If these are expenses that ANY OTHER business would be allowed to deduct, the Dispensary is just claiming those SAME deductions. But the “Terrorism Wing of the U.S. Gov’t.” (the IRS) is out of control and MUST be reigned in. This ENTIRE government is out of control and MUST be reigned in by the PEOPLE!

  3. paul tyner on

    If ever there was a time…. NOW is that time!! Great opportunity you are taking and I hope everyone sees the risk you are taking and who/what for. Risk vs. Rewards!! I dont know that id have the gnads to do whar you are doing?? THANK YOU FOR YOUR WORK!! Full respect.

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