Harborside targeted by feds while Leader Pelosi stresses importance of federal action on medical marijuana
The Associated Press is reporting that Harborside Health Center, which has been called California’s largest non-profit medical marijuana dispensary, is being targeted by federal prosecutors in California. According to Harborside spokesperson Gaynell Rogers, U.S. Attorney Melinda Haag’s office has threatened to seize the property on which Harborside’s two locations operate: one in Oakland and the other in San Jose.
Meanwhile, the ranking Democrat in the House of Representatives and congresswoman for nearby San Francisco, Minority Leader Nancy Pelosi, reaffirmed her support for the medical use of marijuana, telling a round table of bloggers that taking up and discussing federal legislation regarding medical marijuana would be “really important.” While she gave no firm promise to introduce specific legislation, her support for medical marijuana patients puts her at odds with the actions of President Barack Obama’s Justice Department.
President Obama would be wise to listen to his party’s ranking member in the House of Representatives as opposed to career drug warriors like DEA chief Michele Leonhart. While Leader Pelosi recognizes the real and growing evidence of marijuana’s medical efficacy, Agent Leonhart cannot even bring herself to admit that heroin is more harmful than marijuana. And if science isn’t something that the president and his circle are interested in listening to, they should at least listen to the 77% of the American public who support medical access to marijuana.
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.
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
National Cannabis Industry Association, Rep. Jared Polis Lobby Congress On Behalf of Medical Marijuana Industry
From today's press release:
The National Cannabis Industry Association, the first national organization dedicated to advancing the interests of cannabis-related businesses, today discussed the federal legislative needs of the industry at an event at National Press Club. Prominent leaders in the industry joined Congressman Jared Polis (D-CO), as well as the manager of See Change Strategy, an independent firm that, on March 23, released the first-ever financial analysis of the legal medical cannabis industry in the U.S. This report, based on interviews with more than 300 individuals involved in the industry, projected the total legal medical cannabis market at $1.7 billion in 2011.
"Coloradans have known the positive economic benefit of the cannabis industry for quite some time," said Congressman Polis. "Thanks to the voters of Colorado and the regulations established by the General Assembly, we have a vibrant new legal industry. Colorado's entrepreneurial spirit is strong and our local and state governments are enjoying both the increased revenues from the taxation of the sale and production of medical marijuana as well as the reduced human and financial cost of fighting crime. This report should serve as an important signal to all states considering reforming marijuana laws as well as to the federal government that in a comprehensive regulatory environment, the cannabis industry — like any other industry — can provide jobs, revenue for government and most importantly keep this substance out of the hands of children and vulnerable populations."
"This is not an industry looking for special treatment but an industry looking to be treated on par with other small businesses,” said Polis. “We in Congress need to ensure that this industry can access banking, be treated like any other business under the tax code and has regulations to ensure the safety and efficiency of the market."
Industry leaders highlighted the unique problems they confront as businesspeople. In particular, they described the looming challenge presented by Section 280E of the Internal Revenue Code, which, according to the IRS, prevents them from deducting legitimate business expenses.
“We do not believe 280E, which was intended to apply to individuals who were clearly engaged in illegal behavior, should be applied to legal, licensed organizations like Harborside Health Center,” offered Steve DeAngelo, the executive director of the dispensary by that name in Oakland, California. “Harborside is not a drug trafficking organization, we are a community service organization. Standards that were intended for street dealers of harmful drugs should not be applied to those easing the suffering of seriously ill patients.”
Another member shared the ongoing ordeal many organizations face as they attempt to secure and maintain accounts at financial institutions fearful of violating federal law.
“To say that it is frustrating having one bank account after another shut down is an understatement,” said Jill Lamoureux, managing member of Colorado Dispensary Services. “Access to banking is crucial for this emerging alternative healthcare industry. The capital-intensive nature of start-ups calls for traditional banking services, including credit facilities and equipment leasing options. And as the State of Colorado implements the first statewide regulatory system for medical marijuana, electronic banking and recordkeeping is essential for audit and tracking purposes.”
Meanwhile, Aaron Smith, the executive director of the National Cannabis Industry Association, touted the economic benefits of the industry and conveyed the mission of the organization.
“The nation's legal medical cannabis market is now worth nearly $2 billion annually and supports hundreds of small businesses and thousands of jobs,” said Smith. “All indications point to significant expansion of this sector of the U.S. economy in the years to come and the National Cannabis Industry Association was formed to provide the industry with a voice on the national stage along side other legitimate business interests.”
Other members of the National Cannabis Industry Association present at the event were Brian Cook, founder and president of Altitude Organic Corporation; Tripp Keber, managing director and sole owner of Dixie Elixirs & Edibles, LLC in Colorado; and Michael Backes, a member of the board of directors of Cornerstone Research Collective in Los Angeles, California.
The mission of the National Cannabis Industry Association is to defend, promote, and advance the interests of the cannabis industry and its members. NCIA publicly advocates for the unique needs of the emerging cannabis industry and defends against those aiming to eliminate the legal market for cannabis and cannabis-related products. For more information, please visit www.TheCannabisIndustry.org.