Tax Issues | Arizona Medical Marijuana Law

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Tax Prof Thinks Medical Marijuana Dispensaries can Beat Section 280E

American University Washington College of Law Professor Benjamin Leff thinks there is a way that medical marijuana dispensaries in states that have legalized medical marijuana can avoid the application of Internal Revenue Code Section 2080E that causes taxpayers to pay extraordinarily high federal income taxes. Professor Leff wrote an article in Slate called [...]

Marijuana Dealers Get Slammed by Taxes

CNN Money: “entrepreneurs in the nascent medical marijuana industry face a unique burden: an effective federal income tax rate that can soar as high as 75%. The hefty levy is the result of a 1982 provision to the tax code, known as 280E, . . . . the rule bars those selling illegal [...]

IRS Wages War With The Medicinal Marijuana Industry

Forbes: “With 15 states having legalized the sale of medicinal marijuana, the only thing growing faster than the number of 24-year old males with questionable glaucoma prescriptions is the IRS’s scrutiny of this controversial industry. While local law may have blessed the existence of medicinal marijuana facilities, the IRS is not bound by [...]

Lottery does Little to Clear Air on West Valley Medical-marijuana Dispensary Sites

Arizona Republic: “The West Valley could see as many as a dozen medical-marijuana dispensaries if every applicant selected in a bingo-style state lottery earlier this month opens for business. But it’s unclear exactly where the proposed dispensaries, which would be allowed to grow and sell marijuana, would open. A state confidentiality law prohibits [...]

Tax Court Decision Vaporizes the Vapor Room

On August 2, 2012, the U.S. Tax Court issued its decision in the case of Martin Olive vs. Commissioner of the Internal Revenue Service. Martin Olive, a young man unconcerned with the normal formalities of operating a business, owns a relatively well known medical marijuana dispensary in San Francisco, California, called the Vapor [...]

Medical Marijuana Dispensaries Keep On Truckin’ Despite IRS

Forbes: ”If you live in a state with legal medical marijuana dispensaries you probably know that the feds do what they can to stamp them out. . . . The nationwide crackdown involves a multi-pronged approach, and that’s not easy for the dispensaries or for the people who rely on them. . . . In [...]

People Experienced with Internal Revenue Code Section 280E

Entities that actually obtain a dispensary registration certificate from the Arizona Department of Health Services will be required to file federal income tax returns that are substantially different than tax returns of other businesses. Medical marijuana dispensaries must keep financial books in a way that will assist the dispensaries’ CPAs in preparing the [...]

IRS Claims Harborside Health Center Owes $2.5 Million in Back Taxes on Sales of $22 Million

The Bay Citizen: “IRS Claims Harborside Health Center Owes $2.5 Million in Back Taxes on Sales of $22 Million – Oakland’s Harborside Health Center — the largest medical marijuana dispensary on the West Coast — lost the first round in a high-stakes battle with the Internal Revenue Service that could spell trouble for [...]

Tempe May Tax Sales of Medical Marijuana

Arizona Republic: “Last week, the Tempe City Council had its first hearing on the possibility of amending the city’s tax code so that those purchasing the drug in Tempe could be charged a 2-percent municipal sales tax.”

Lawyer in the CHAMPS Marijuana Dispensary Tax Comments on IRS Dispensary Audits

Taxes.com: “Henry Wykowski . . . represented Californians Helping to Alleviate Medical Problems . . . in that dispensary’s landmark 2007 case against the IRS. Now, many of the growing number of California dispensaries facing what could amount to debilitating audits have sought out Wkyowski’s services. . . . ‘The most successful dispensaries [...]

IRS is in the Early Stages of a War to Kill Medical Marijuana Dispensaries

Question: Does a medical marijuana dispensary that is legal under state law have anything to fear from the Internal Revenue Service?

Answer: Yes. In 2007 the United States Tax Court issued its opinion in the case of Californians Helping to Alleviate Medical Problems, Inc. v. Commissioner of Internal Revenue. The issue in this [...]

Millions at Stake in IRS Audit of Oakland Medical Marijuana Dispensary

Sacramento Bee: Harborside Health Center in Oakland, California “handles $22 million in annual medical marijuana transactions. Now Harborside is attracting scrutiny from the Internal Revenue Service. Since last year, the IRS has been auditing 2008 and 2009 federal tax returns for the Oakland location, one of two outlets Harborside operates for 70,000 medical [...]

IRS tells California Medical Marijuana Dispensary it Owes Millions in Unpaid Taxes

Marin Independent Journal: “The Internal Revenue Service has notified the Marin Alliance for Medical Marijuana in Fairfax that it owes millions of dollars in unpaid back taxes, according to the alliance’s founder and director, Lynnette Shaw. Shaw said the IRS audited the alliance’s tax returns for 2008 and 2009 and disallowed all of [...]

IRS Goes After Medical Marijuana Dispensary in California

The American Independent: “Federal agencies have stepped up efforts to crack down on medical marijuana, and while high-profile ATF raids may be more immediately shocking, there is a less direct tactic being used that could spell the death of medical marijuana across the country, according to its opponents. In the last several months, [...]

Medical Marijuana Dispensaries; the Federal Income Tax Deductibility Nightmare

Given the recent enactment of the Arizona Medical Marijuana Act, we anticipate a number of new business enterprises in the Arizona market attempting to comply with its “dispensary” provisions. Thoughtful entrepreneurs engaged in this fledgling industry will be wondering whether they will be permitted to deduct the expenses incurred in their business operations. [...]

Why Your Dispensary Needs to Rent More Space than Needed for its Retail Store

Question: I know that in 2007 the U.S. Tax Court ruled in the CHAMPS case that Section 280E of the Internal Revenue Code prohibits deducting from gross income any business expenses that are paid or incurred in connection with trafficking in marijuana. Is there a way that my nonprofit entity that operates an Arizona medical [...]

HB 2557 to be Amended to Tax Medical Marijuana 100%

I heard a news report on the radio yesterday that quoted Arizona state legislator Steve Farley as saying that HB 2557 will be modified to tax sales of medical marijuana a a mere 100%. Whoopee! See Ray Stern’s story called “Medical Marijuana Tax Proponent Aims Lower; State Rep. Steve Farley Now Wants 100 [...]

Arizona Main Stream Media Silent on HB 2557 & the Proposed 300% Tax on Medical Marijuana

HB 2557 (aka the Grow Your Own Pot All Over Arizona Act or the Small Group of Elites Overrules the Majority of the Arizona Voters Act)

On January 26, 2011, a group of legislators who want to overturn the will of the majority of the Arizona people who voted for Arizona Proposition 203 [...]

Arizona Attorney General Calls for a Tax on Medical Marijuana

Arizona Republic: “Attorney General Tom Horne opposed a ballot measure to legalize medical marijuana but now he’s calling for it to be taxed. State tax collectors say that’s exactly what they plan to do.”

The Republic missed the big story on taxing medical marijuana. On January 26, 2011, a group of [...]

Arizona Legislators Introduce HB 2557 to Overturn Voters Approval of Proposition 203

The voters of Arizona spoke when a majority approved Proposition 203. Now a group of elected elites who know what is best for the people of Arizona introduced House Bill 2557 (aka the “Don’t Divert Money from the Drug Cartels Act”) on January 26, 2011, for the sole purpose of killing Arizona’s medical [...]

Medical Marijuana Will be Taxed Says Arizona Attorney General Tom Horne

Here is the text of a January 26, 2011, press release by Arizona Attorney General Tom Horne:

HORNE TO RECOMMEND TAXATION OF MEDICAL MARIJUANA

Phoenix (Wednesday January 26, 2011) – Attorney General Tom Horne today announced that he is recommending to the Arizona Department of Revenue that medical marijuana, made legal in a [...]

Medical Cannabis Dispensaries: Minimizing the Cost of IRC Section 280E

Luigi Zamarra, CPA is the Chief Financial Officer of Harborside Health Center, recognized as one of the largest medical cannabis dispensaries in the United States. Mr. Zamarra has written an interesting article entitled “Medical Cannabis Dispensaries: Minimizing the Cost of IRC Section 280E” that is a must read for all prospective owners of [...]

Internal Revenue Code Section 280E

How to Calculate the Taxable Income of a Medical Marijuana Dispensary Business Under Section 280E of the Internal Revenue Code

In the U.S. Tax Court case of Californians Helping to Alleviate Medical Problems, Inc. v. Commissioner of Internal Revenue, 128 T.C. No. 14 (2007), the issue before the court was whether the Petitioner [...]

Californians Helping to Alleviate Medical Problems, Inc. v. Commissioner of Internal Revenue

In 2007 the U.S. Tax Court held that Internal Revenue Code Section 280E prevents expenses incurred in a business of growing or selling medical marijuana that is legal under California law from being deductible in determining the taxable income of the business for federal income tax purposes.

128 T.C. No. 14

Must My Nonprofit Arizona Medical Marijuana Dispensary Be a Federal Tax-exempt Organization?

Question: Must My Nonprofit Arizona Medical Marijuana Dispensary Be a Federal Tax-exempt Organization?

Answer: No and thankfully no! Arizona Revised Statutes Section 36-2806.A states: “A registered nonprofit medical marijuana dispensary need not be recognized as tax-exempt by the Internal Revenue Service.” If Proposition 203 required dispensaries to become tax-exempt organizations, the IRS would [...]

IRS Auditing Harborside Health Center Oakland’s Biggest Pot Dispensary

The Bay Citizen: “In an ominous portent of the clash between federal and state law over medical marijuana, the IRS is auditing the Bay Area’s largest medical pot dispensary, Harborside Health Center . . . . a Nov. 15 letter that Harborside sent to Sen. Barbara Boxer asking for tweaks in tax laws [...]

Arizona Medical Marijuana Law

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