US Tax Court: No Medical Marijuana Dispensary Tax Deductions

A new US Tax Court decision is slapping San Francisco’s already-forced-to-shutdown Vapor Room dispensary with a massive tax bill by disallowing tax deductions. It sets a scary legal precedent to force many other medical marijuana dispensaries operating perfectly legitimately under state law into potential bankruptcy if they can’t claim tax deductions.

“The dispensing of medical marijuana, while legal in California, among other states, is illegal under federal law,” Tax Court Judge Diane L. Kroupa noted. “Congress has set an illegality under federal law as one trigger to preclude a taxpayer from deducting expenses incurred in a medical marijuana dispensary business. This is true even if the business is legal under state law.”

Even with the huge momentum marijuana reform has in terms of number of medical and recreational legalization bills coming up for vote, the federal government shows no signs of relenting by using as many of its departments as possible to crush medical marijuana this election season. 

As a Bay Area resident, it’s truly saddening as I think about the impact to our local economy and patients’ safe access to medication as our medical marijuana dispensaries continue to shutter from overwhelming federal attacks.

Medical marijuana businesses have often voted against full legalization measures. I sincerely hope these businesses realize until there is clear protection under federal law they will be subject to random beatings and inconsistent demands from the federal government making it impossible to run a business. If we are not a united voting bloc, we will fail.

We must be push for states to fully legalize to place pressure at the federal level for change, fight to reschedule marijuana at the federal level and be vocal with our Congressional representatives to support the Truth in Trials Act and the States’ Medical Marijuana Property Rights Protection Act.