As part of the federal government’s escalating efforts to shut down the medical marijuana industry, the IRS is claiming that Harborside Health Center, an Oakland dispensary that is thought by many to represent the best practices in the industry, owes them roughly $2.5 million in back taxes. The reason for this is that during the audit, the IRS would not let Harborside deduct many of its business expenses.

Most of these expenses were for things that all other legitimate businesses are allowed to deduct, such as rent and payroll. They were, however, allowed to deduct the actual marijuana being given to patients. The reason for all this is Section 280E of the Internal Revenue Code, which basically allows the IRS to fully tax any group it considers a drug trafficking organization. This is mostly used to snare actual drug traffickers for tax evasion, much like the way Al Capone was finally arrested. Criminal kingpins are not known for filing taxes and reporting their illicit income.

The IRS claims that Harborside, and all other dispensaries, are criminal organizations, so they can’t make any of the deductions other businesses make. But they will still take the money. Many are worried that this will destroy the industry by making it impossible for most dispensaries to afford to stay in business.

MPP is currently pushing a pair of bills through Congress that would remove this threat to patients and providers, as well as allow banks to do business with dispensaries without fear of federal prosecution.

Please urge your representative to sponsor the Small Business Tax Equity Act of 2011 and the Small Business Banking Improvement Act of 2011.

While we’re waiting for Congress to act on these bills (and it may take a while), feel free to contact the IRS and tell them that tax-paying medical marijuana businesses are legitimate and should be treated as such. They are not drug dealers.

Here’s the number: 1-800-829-4933

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Over the weekend, the Oakland Tribune reported that law enforcement officers at Oakland International Airport follow an official written policy of respecting California’s medical marijuana laws. Qualified medical marijuana patients traveling out of Oakland are not arrested or cited for possession of eight ounces or less of processed marijuana. In fact, patients are allowed to board their plane with their marijuana just as they could with any other legal medicine or prescription drug. [Read more →]

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Yesterday, voters in Oakland, California overwhelmingly approved a proposal, backed by the city’s medical marijuana community, that will create a new local sales tax for marijuana. The initiative, “Measure F,” was one of  four budget-related measures in a vote-by-mail special election called by a city faced with a projected budget deficit of $83 million.

Medical marijuana collectives teamed up with city officials to propose the new tax, set at 1.8% of gross sales. The tax is expected to generate close to $300,000 for the city next year.

It’s not every day that an industry stands up and says “tax us more.” MPP commends Oakland’s four medical marijuana collectives for stepping up to the plate and helping the bridge the city’s budget gap.

[Read more →]

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