IRS Harrassing Sacramento Marijuana Dispensary over business expenses

  Sacramento’s Canna Care dispensary, a religious medical marijuana provider well known for giving out buds with Bibles, is waging a public fight with the Internal Revenue Service over an $873,167 tax penalty sought under a tax code aimed at illegal drug traffickers.

  On Feb. 24th, the U.S. Tax Court in San Francisco is due to hear Canna Care’s challenge over whether the IRS can impose the hefty tax demand under a 1982 law intended to close a loophole that allowed a Minneapolis drug dealer to claim tax deductions for a scale, his apartment rent and telephone expenses.

  In the case of Cannacare, the IRS has refused to accept over $2.5 million in business deductions for employee salaries, rent and other costs after auditing 2006, 2007 and 2008 federal tax returns for the north Sacramento dispensary. The IRS did allow the dispensary, which handles about $2 million in medical marijuana transactions a year, to deduct the costs of the marijuana itself. 

  The IRS used the Reagan era tax code, known as 280E, to seek tax penalties against numerous California dispensaries under the argument that their business expenses constitute support of drug trafficking operations. Its ok to deduct the cost of marijuana though?

Those targeted have included California's largest medical marijuana provider, Harborside Health Center, which is negotiating with the IRS over the government’s demand for $2.5 million in back taxes for Harborside’s Oakland and San Jose dispensaries.  Canna Care employs 12 people the CEO makes $100,000 and the director makes $75,000 a year. The other employees make between $30,000 and $40,000 in addition to health benefits. The dispensary maintains its non-profit status in part by supporting charities, including cancer research and a community Christmas event in Del Paso Heights.  

  So the IRS is targeting a 12 person business who donates all their profits to charity and whose CEO only makes $100,000.  Clearly the government has no concern for the sick citizens of America they just care about getting more tax revenue to spend on programs we don't want or need.