US Supreme Court declines to hear 280E marijuana tax case

Marijuana businesses hoping to see the end of onerous 280E tax provisions were dealt a setback by the nation’s highest court.

The U.S. Supreme Court declined to review a petition brought by a Colorado medical cannabis dispensary challenging the authority of the Internal Revenue Service.

Alpenglow Botanicals, based in Breckenridge, argued in its petition to the high court that Section 280E of the federal tax code doesn’t empower the IRS to investigate and rule that a marijuana business has violated federal criminal drug laws.

The federal government responded that 280E specifies that no tax deduction or credit should be allowed for any expense paid or incurred in carrying out a business that “consists of trafficking in controlled substances.”

Marijuana is listed as a Schedule 1 drug under the Controlled Substances Act.

Both the U.S. District Court in Colorado and the 10th Circuit Court of Appeals in Denver had affirmed the IRS ruling.

Alpenglow had claimed a variety of business deductions that the IRS determined were prohibited by 280E.

The denial of the deductions resulted in Alpenglow owners Charles and Justin Williams owing a total of $53,094 to the IRS, according to court documents.

After the bill was paid, Alpenglow filed refund claims and started on the road of challenging in court the application of 280E.

Alpenglow’s attorney didn’t immediately respond to Marijuana Business Daily‘s request for comment.

Jeff Smith can be reached at [email protected]

10 comments on “US Supreme Court declines to hear 280E marijuana tax case
  1. david on

    85% of California’s cannabis business that were not allowed into the legal system and then took all the consumers with them, are exempt from 280e taxes. I read it in the Black Market rules and regulations.
    I must say, you’ve got to hand it to the BCC. Hundreds of pages of rules and regs that accomplish two things. Vendors are not welcome and we’ll double your volume if you go Black Market, with no taxes to boot. God Bless America!

    Reply
    • Chris on

      Black market = possibly tainted product. Regulation guarantees accurate information in regards to potency testing, microbrials and pesticides. Give it a year and the market will be flooded with product, the wholesale cost will plummet and the pricing reduced by 50-75% to the consumer. This will gouge the black market’s appeal. All states that have come before have followed this path. Then only the strong survive. Capitalism. The IRS ruling was inevitable, the Supreme Court is simply saying there is no reason for us to take up the case because we agree with the lower court’s ruling. Alpenglow’s attorneys should have recognized it would be a fruitless effort. Good try though.

      Reply
  2. Commentor on

    There is your supposed “conservative” court appointed by so-called “conservatives,” you know the ones that believe in smaller, less expensive government. Or I should say, “Republicans”, politicians masquerading as “conservatives,” the ones who claim to be conservative but then danced around the fire when internet retailers were forced to charge sales taxes.

    Reply
  3. William Fowler on

    June 29th commentor stating that it is the conservative Supreme Court that gave this ruling. People, just do not understand, when it comes to the IRS and taxes, the Supreme Court steps back. Go look up the ruling when the Obama Care came before the Supreme Court and again, Justice Roberts stated that if it is an “IRS tax” then the court has no jurisdiction to intervene. Remember, that Roberts is supposedly a conservative judge, so the June 29th Commentor has absolutely no voice on this subject. Stop bringing in politics into every issue and we would have less dissent in this country.

    Reply
  4. WT on

    With such punitive taxation I guess you can’t blame members of the marijuana business community for stashing the cash. I think in the long run the federal government will regret it. They think they are making a lot of money now when they could be raking it in by factors of ten were the laws to change.

    Reply
  5. William Fowler on

    I have to say that when more cases are brought before the IRS regarding the 280E cannabis issue, then less chance of the taxpayer winning. From my experience, as a former IRS analyst, whom has won in U.S. Tax Court, these cases, that are not well thought out, basically shot gunning the premise of “penalties the IRS is imposing regarding 280E” this taxpayer defense does not hold water and will be defeated in Tax Court every time. On the other hand, if you want to win your 280E case in U. S. Tax Court, that taxpayer must have a good team and provide a very good premise of defense based upon precedent tax court cases. If you want a good team, then hire Nevium.com senior consultants to take your 280E case to tax court…only then do you have a chance to win.

    Reply

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