How Arizona’s Non-profit Medical Marijuana Dispensaries Make Millions

Azcentral.com: “Sales of medical marijuana here soared nearly 50 percent in 2017 with an estimated value of $387 million. A small army of attorneys and high-end Scottsdale public relations professionals work on its behalf.  The size and scope of these operations belies the “non-profit” description voters heard when they approved medical marijuana in 2010. They also highlight an open secret within the industry: Non-profit doesn’t mean non-lucrative.”

By | 2018-01-28T08:43:43+00:00 January 26th, 2018|Stories & Articles|0 Comments

A Final Article on Cannabis and Section 280E

An accountant wrote a very interesting article about accounting for marijuana businesses and Internal Revenue Code Section 280E.  If you own a cannabis business you should read the article.

“I have been a cannabis tax professional for six years now. Initially, I can remember reading articles from organizations like the AICPA, saying that since cannabis was illegal federally, that any accountant that participated in helping those in cannabis were in jeopardy of losing their license. But then what do you expect from an industry that is so far behind, a majority of tax accountants are still printing and mailing tax returns.”

See also “Tax Professionals Need to Talk about the Cannabis Industry.”

By | 2018-01-19T07:02:28+00:00 January 19th, 2018|Stories & Articles, Tax Issues|0 Comments

Massachusetts U.S. Attorney May Prosecute State Legal Marijuana Users & Dealers

Boston Globe:  “The state’s top federal prosecutor on Monday refused to rule out a crackdown on the voter-authorized marijuana industry, prompting howls from advocates and politicians and moving Massachusetts to the forefront of the battle between the Trump administration and the dozens of states where cannabis is legal.  “I cannot . . . provide assurances that certain categories of participants in the state-level marijuana trade will be immune from federal prosecution,” said US Attorney for Massachusetts Andrew E. Lelling.”

By | 2018-01-12T07:11:47+00:00 January 12th, 2018|Federal Dispensary Attacks, Stories & Articles|0 Comments

Court to Review Legality of Medical Marijuana on Campuses

Arizona Daily Sun:  “The Arizona Supreme Court will decide whether lawmakers can make criminals of legal medical marijuana users who possess their drug on college and university campuses.  In a brief order, the justices agreed to hear arguments by Attorney General Mark Brnovich that the Court of Appeals erred lasts year when it voided a 2012 law that made possession of the drug on campuses a crime.”

By | 2018-01-19T05:28:56+00:00 January 11th, 2018|AZ Marijuana Law Lawsuits, Stories & Articles|0 Comments

Chandler Approves Marijuana Dispensary near Learning Center

AzFamily.com:  “Workers are putting the finishing touches on the first medical marijuana dispensary approved within Chandler city limits, but there is a cloud of controversy surrounding the ribbon-cutting ceremony scheduled for next week.  The facility, called Territory Dispensary, will be a few hundred feet from a “learning center” for kids and adults with disabilities.  The dispensary will share a parking lot with Smiles Learning Center, which has playground equipment outside geared toward young children.  Chandler’s city ordinance prohibits dispensaries from opening within a quarter-mile of a school or day care.”

By | 2018-01-19T07:14:50+00:00 January 10th, 2018|Stories & Articles|0 Comments

Blame the Supreme Court for Letting the Feds Target Legal State Pot

Reason.com:  “Attorney General Jeff Sessions is reportedly planning to let federal prosecutors aggressively enforce federal anti-marijuana laws in states where pot has been legalized.  What gives the federal government the authority to target legal state pot? The answer is not the Constitution. This federal power grab is the product of two awful Supreme Court precedents.”

Arizona Medical-Marijuana Industry at Risk

Phoenix New TimesAttorney General Jeff Sessions is rescinding the federal policies that kept prosecutors from interfering with legal marijuana in states across the U.S. Now, those prosecutors can use their discretion to enforce federal marijuana law, even in states where pot is legal for recreational or medical purposes — like Arizona.  In a release, the Justice Department called the move “a return to the rule of law” that allows federal prosecutors to take local control of how they go after drug offenses.”

U.S. to End State Legalization of Pot

Associated Press:  “Attorney General Jeff Sessions is rescinding the Obama-era policy that had paved the way for legalized marijuana to flourish in states across the country, two people with knowledge of the decision told The Associated Press. Sessions will instead let federal prosecutors where pot is legal decide how aggressively to enforce federal marijuana law, the people said.”

California Legalizes Pot Sales

Associated Press:  “Californians may awake on New Year’s Day to a stronger-than-normal whiff of marijuana as America’s cannabis king lights up to celebrate the state’s first legal retail pot sales. . . . From the small town of Shasta Lake just south of Oregon to San Diego on the Mexican border, the first of about 90 shops licensed by the state will open Monday to customers who previously needed a medical reason or a dope dealer to score pot.”

By | 2018-01-01T07:47:35+00:00 January 1st, 2018|California News, Stories & Articles|0 Comments

Hippy Dream now a Billion-dollar California Industry

The Guardian:  “The state that is the world’s sixth biggest economy will legalise cannabis on New Year’s Day – and expects a boom time for jobs and investment. . . . On Monday [January 1, 2018] , California, the US’s most populous state, and the world’s sixth biggest economy, will officially “hit it” by legalizing cannabis. . . . Overnight a shadow industry worth billions of dollars annually will emerge into the light, taking its place alongside agriculture, pharmaceuticals, aerospace and other sectors that are regulated and taxed.”

By | 2018-01-01T08:16:39+00:00 December 30th, 2017|California News, Stories & Articles|0 Comments

Dispensary Fights IRS in U.S. Tax Court

Cannabist:  “As marijuana tax reform efforts petered out on Capitol Hill, another endeavor is before the U.S. Tax Court to let state-legal cannabis businesses take deductions and credits.  The owners of a marijuana dispensary in Palisade, Colo., claim their income was unjustly taxed twice because of the Internal Revenue Service’s application of Section 280E, a tax code that disallows credits and deductions from income generated by sales of controlled substances.  Jesse and Desa Loughman, owners of Colorado Alternative Health Care, recently filed a brief in U.S. Tax Court, challenging the IRS’ determination of taxes owed for 2010, 2011 and 2012.”

 

By | 2017-12-12T21:28:43+00:00 December 7th, 2017|Stories & Articles|0 Comments

Dispensary’s Marijuana Has Mold

Azfamily.com:  “Independent test results found mold on medical marijuana sold in the Valley that would not meet standards in some other states.  Unlike most states with medical marijuana programs, Arizona does not establish contaminant standards for cannabis or require that cannabis products be tested in any way.  An independent lab tested four cannabis flower products from Encanto Green Cross Dispensary in Phoenix after former employees complained to CBS 5 Investigates about issues with mold.”

By | 2017-12-12T21:23:20+00:00 December 7th, 2017|Stories & Articles|0 Comments

Medical Marijuana Dispensary Closes in Williams

Williams News:  “After nearly five years, the Route 66 Wellness Center in Williams is closing its doors.  Despite a handful or regular patients, Cannabis Research Group has decided to close the doors to their medical marijuana dispensary in Williams to be closer to its main customer, Desert Springs Cancer Care in Scottsdale.  “It’s going to be a whole different situation, but we aren’t going to leave anybody high and dry in this area,” said store Manager Phillip Alexander.”

By | 2017-12-06T06:59:16+00:00 December 6th, 2017|Stories & Articles|0 Comments

No Bankruptcy Aid For Marijuana Businesses, Justice Department Officials Say

Forbes:  “The U.S. Department of Justice is issuing another reminder that marijuana businesses don’t have a right to bankruptcy proceedings. . . . ‘”First, the bankruptcy system may not be used as an instrument in the ongoing commission of a crime and reorganization plans that permit or require continued illegal activity may not be confirmed. Second, bankruptcy trustees and other estate fiduciaries should not be required to administer assets if doing so would cause them to violate federal criminal law’.”

Guess Which Industry Didn’t Get a Break in the Tax Bill

Leafly:  “The sweeping tax bill passed by the US Senate over the weekend contains all sorts of giveaways to businesses, from generous write-offs for factories and equipment to bargain-basement rates on offshore tax havens. But for all the boons to business it provides, the bill fails to deliver commonsense tax reform to the cannabis industry.  Two separate proposed amendments to the Senate tax bill would have ended a decades-old penalty that currently treats state-legal cannabis businesses like drug cartels. The rule, IRS Section 280E, prevents cannabis businesses from taking tax deductions available to other industries, often pushing their effective tax rates to more than 70%.

By | 2017-12-05T19:10:22+00:00 December 4th, 2017|Stories & Articles, Tax Issues|0 Comments

Army to Accept Pot Smokers

Fox News:  “Smoked pot? Want to go to war?  No problem.  As more states lessen or eliminate marijuana penalties, the Army is granting hundreds of waivers to enlist people who used the drug in their youth — as long as they realize they can’t do so again in the military.  The number of waivers granted by the active-duty Army for marijuana use jumped to more than 500 this year from 191 in 2016. Three years ago, no such waivers were granted. The big increase is just one way officials are dealing with orders to expand the Army’s size.”

By | 2017-12-05T18:05:35+00:00 December 2nd, 2017|Miscellaneous|0 Comments

Cannabis Companies Crossing Fingers For 280E In Tax Vote

Green Report:  “Section 280E, which prevents state-legal marijuana companies from deducting otherwise ordinary business expenses from their total income, is one of the biggest obstacles cannabis entrepreneurs run up against. . . . While most companies in the U.S. pay a standard corporate tax rate of 35 percent, cannabis businesses, thanks to 280E, often face effective tax burdens of 70 percent or more.  But there is hope on the horizon. Just this week, Sen. Cory Gardner’s press secretary said the senator ‘plans to file an amendment’ to the sweeping Senate tax overhaul bill that would reform 280E so it no longer applies to marijuana businesses operating in accordance with state and local laws,”

By | 2017-12-05T18:15:49+00:00 December 1st, 2017|Legal Issues, Stories & Articles, Tax Issues|0 Comments

Support The Gardner Amendment Addressing 280E

Weed News:  “Congress is currently in the middle of a tax overhaul push. To be upfront and clear, I do not support the tax proposal. I think that the math is clear that it will overwhelmingly benefit the richest of rich people, and at the expense of the rest of Americans. The United States House of Representatives has already passed their version of a tax bill, and the Senate is looking like it’s getting closer to a vote of its version of a tax bill with every passing minute.  There is one silver lining in the tax bill that is worth supporting, even if you are like me and you don’t support the overall tax plan. Colorado Senator Cory Gardner has introduced an amendment that alleviates the 280E tax penalty in the federal tax code.”

By | 2017-12-05T18:10:16+00:00 November 30th, 2017|Stories & Articles, Tax Issues, Washington News|0 Comments

Marijuana Stores Would Be As Profitable As Starbucks If Not For Tax Laws

Freshtoast:  “Arcane rule in IRS code prevents cannabis companies from legitimate deductions.  Marijuana retail shops are more profitable than the average Starbucks store if only if they were taxed the same way as traditional retailer, according to a report published by Arcview Market Research.”

By | 2017-12-05T18:55:02+00:00 November 23rd, 2017|Stories & Articles, Tax Issues|0 Comments

Arizona Agency Defies DEA, Okays Cannabis Extracts for Foster Parents

Phoenix New Times:  “A new rule on foster parenting released by the Arizona Department of Child Safety still discriminates against cannabis patients, but it defies federal authorities in approving cannabis extracts.  The rule codifies a September decision about a possible foster-care license for a woman who treats her adopted 12-year-old son’s self-injuring behavior with cannabidiol (CBD).  Phoenix New Times received a copy of the ruling last week after a public-records request.”

By | 2017-12-05T19:00:44+00:00 November 20th, 2017|Legal Issues, Stories & Articles|0 Comments

Structuring the Ownership of Marijuana Businesses to Minimize Tax Impact

The CPA Journal:  “The IRS has made it daunting for an investor to make an after-tax profit in the marijuana business. Aside from the criminal laws, which are essential to know, trying to understand the tax laws can be a challenge. It is therefore critical to consider the right ways to structure the ownership of these businesses in order to reduce the tax impact for investors.”

By | 2017-11-04T09:16:19+00:00 November 4th, 2017|Stories & Articles, Tax Issues|0 Comments

Deductible Business Expenses for Marijuana Dispensaries

The CPA Journal:  “The biggest hurdle for dispensaries is the current tax framework, which treats marijuana growers more adversely than both legal and illegal businesses alike. Under Internal Revenue Code (IRC) section 61, unless specifically excluded, all sources of income are taxable, regardless of their origin. Under the recovery of capital doctrine, taxpayers are allowed to recover their cost of goods sold. In addition, IRC section 162 provides a current deduction for all ordinary and necessary business expenses. . . . . There is, however, an additional limitation for taxpayers engaged in the trafficking of controlled substances. IRC section 280E denies all ordinary and necessary business expenses paid or incurred in connection with the sale or trafficking of controlled substances listed on Schedule I or II of the Controlled Substances Act. Currently, 21 USC 812(c)(10) lists marijuana as a Schedule I drug. Furthermore, the courts have held that the sale of marijuana constitutes trafficking, regardless of legality at the state level. Thus, the ordinary and necessary deductions available to most businesses (both legal and illegal) are denied to the marijuana industry.”

By | 2017-11-04T09:11:27+00:00 November 4th, 2017|Stories & Articles, Tax Issues|0 Comments

Navajo County Judge Declares Pot Extract Illegal

Tucson Weekly:  “Navajo County Superior Court Judge Dale Nielson has declared extracts illegal.  The basis for his stance concerns the definition of cannabis in Arizona state law. The state’s statutes define cannabis as “the resin extracted from” marijuana plants, and pot laws written more than 50 years ago classify cannabis as a narcotic.  The 2010 Arizona Medical Marijuana Act, however, has no definition for cannabis, raising inconsistencies about what patients can buy from dispensaries. It does have language about mixtures and other preparations, but Nielson decided this only applies to the dried flower.”

 

By | 2017-11-04T10:19:12+00:00 November 2nd, 2017|AZ Marijuana Law Lawsuits, Stories & Articles|0 Comments

Medical-Cannabis Extracts at Arizona Dispensaries Deemed Illegal

Phoenix New Times:  “A Navajo County judge’s recent ruling about medical-marijuana extracts could lead to popular dispensary products like vape cartridges and edibles being taken off the shelves.  Don’t freak out: That’s a worst-case scenario. But it’s possible, if a higher court ultimately agrees with the judge and rules that “cannabis” is not covered by the Arizona Medical Marijuana Act.”

Los Angeles Contemplates a Dumb Pot Move

Los Angeles Times:  “the draft of cannabis rules that the Los Angeles City Council will be asked to vote on sometime in the next week or so, . . . almost every other cannabis business except about a few dozen older dispensaries — will be required to shutter their operation until they receive an official city license. It’s a process that could take months.  ‘You have a multimillion-dollar industry in Los Angeles and to have it come to a grinding halt will be ridiculous,. . . . People will be fired, or laid off. Businesses will have to leave the city. It’s a very messed up situation to say the least’.”

 

By | 2017-10-14T07:41:56+00:00 October 9th, 2017|California News, Stories & Articles|0 Comments

For Those Who Have Income from Marijuana: Remaining Silent Before the Tax Man

Bloomberg:  “Does your state permit sales of medical marijuana? If so, will you be prosecuted for filing your tax return and reporting your state medical marijuana income? You could, if you report illegal sources of income and fail to invoke your Fifth Amendment right against self-incrimination. In this article, Ropes and Gray LLP’s Gabrielle G. Hirz and Kathleen Saunders Gregor, and Stefan G. Herlitz of Harvard Law School discuss filing and reporting income, even illegal income, and how the Fifth Amendment applies to tax returns and audits. “

By | 2017-10-01T13:46:12+00:00 October 1st, 2017|Stories & Articles, Tax Issues|0 Comments

Pot Legalization in California Brings a Bonanza of Government Jobs

Los Angeles Times:  “Scientists. Tax collectors. Typists. Analysts. Lawyers. And more scientists.  Recreational marijuana use becomes legal in California in 2018, and one of the things to blossom in the emerging industry isn’t green and leafy, it’s government jobs.  The state is on a hiring binge to fill what eventually will be hundreds of new government positions by 2019 intended to bring order to the legal pot economy, from keeping watch on what’s seeping into streams near cannabis grows to running background checks on storefront sellers who want government licenses. Thousands of additional jobs are expected to be added by local governments.”

By | 2017-10-01T13:22:46+00:00 October 1st, 2017|California News, Stories & Articles|0 Comments

Sessions Targets Pot, But Six Bills Could Keep the Industry Rolling

Cozen O’Connor:  “In May, Attorney General (AG) Jeff Sessions sent a letter to Congress that zeroed in on the Rohrabacher-Blumenauer Amendment, a cornerstone of federal cannabis legislation that has handcuffed the Department of Justice from using its resources to enforce the Controlled Substances Act (CSA) in states with marijuana-legalization laws. The amendment was added to the federal budget in 2014—and has been renewed every year since—but the new AG warned that it could be contributing to a drug epidemic and violent crime. Mr. Sessions also recently sent letters critical of state marijuana laws and enforcement policy to Colorado, Washington, Oregon, and Alaska, which some supporters of legalized marijuana saw as an ominous sign of an impending crackdown. Anxiety among supporters only continued to grow as the House Committee on Rules blocked a floor vote to renew the Rohrabacher amendment on September 6th.

By | 2017-10-01T13:26:42+00:00 September 30th, 2017|Federal Dispensary Attacks, Stories & Articles|0 Comments

Target Pulls the Hemp Oil Product That DEA Opposes From Online Store

Phoenix New Times:  “Target’s online store stopped selling hemp oil containing cannabidiol, a cannabis extract, on Thursday in the wake of concerns by the U.S. Drug Enforcement Agency about the products.  CW Hemp, makers of Charlotte’s Web high-cannabidiol (CBD), low-THC extract oil, announced Thursday morning that its products could be purchased through the retail giant’s website. According to the Cannabist web site, CW Hemp put out a press release on Thursday announcing that Target sold the products, claiming it meant CBD was ‘going mainstream.’ . . . But by Thursday afternoon, Target’s web page that sold the products was updated to reflect the products’ removal.”

By | 2017-09-30T17:26:20+00:00 September 30th, 2017|Stories & Articles|0 Comments
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