Jump to content

Us: Court Ruling Costly To Pot Dispensaries‏


Malamute

Recommended Posts

Newshawk: http://www.drugsense.org/donate.htm
Pubdate: Fri, 10 Jul 2015
Source: San Francisco Chronicle (CA)
Webpage: http://drugsense.org/url/YMsgFoOz
Copyright: 2015 Hearst Communications Inc.
Contact: http://www.sfgate.com/chronicle/submissions/#1
Website: http://www.sfgate.com/chronicle/
Details: http://www.mapinc.org/media/388
Author: Bob Egelko

COURT RULING COSTLY TO POT DISPENSARIES

A San Francisco federal appeals court dealt a financial setback to
medical marijuana dispensaries Thursday, saying that - unlike other
commercial enterprises - they can't deduct business expenses from
their taxable income because their product is prohibited by federal law.

The ruling by the Ninth U.S. Circuit Court of Appeals was also
another blow to the Vapor Room, which operated as a pot-inhaling shop
and social club in the Lower Haight neighborhood from 2004 until July
2012, when it shut down under pressure from U.S. Attorney Melinda
Haag, who said she would seek its eviction for being too close to
Duboce Park. Federal law increases penalties against marijuana
dispensaries that are less than 1,000 feet from a school or
playground, and the Vapor Room was 597 feet from the Duboce playground.

The business has continued as a delivery service, and owner Martin
Olive recently announced plans to reopen at a new location.

Olive had claimed $650,000 in business expenses on its 2004 and 2005
federal income tax returns, but the Internal Revenue Service balked.
The court in Thursday's opinion upheld the IRS' tax assessments for
Olive for those years. While the Vapor Room provided free snacks,
movies and massage therapy, the court said, its only commercial
product was marijuana, and federal law denies deductions for the
expenses of "trafficking in controlled substances."

Olive's lawyer argued that the tax law, which dates from the 1980s,
shouldn't apply to marijuana businesses legalized by state laws,
starting with California's Proposition 215 in 1996. The court disagreed.

"If Congress now thinks that the policy embodied in (the tax
deduction disallowance) is unwise as applied to medical marijuana
sold in conformance with state law, it can change the statute. We may
not," said Judge Susan Graber in the 3-0 ruling.

But Olive's lawyer, Henry Wykowski, saw a bright spot in the ruling -
the court's confirmation of a 2007 U.S. Tax Court decision allowing
medical marijuana outlets to deduct expenses from other sales, like
food and services.

"The decision will benefit dispensaries that sell variety of products
including those that are not cannabis,"

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
×
×
  • Create New...