Medical marijuana dispensaries that have taken federal tax deductions are about to be gut-checked by the Internal Revenue Service (IRS), thanks to a recent ruling by the U.S. Tax Court in Washington, D.C.
In Olive v. Commissioner (PDF), judges unanimously found that the owner of the Vapor Room Herbal Center, one of San Francisco’s largest and most profitable dispensaries, was not allowed to take business deductions because the business was trafficking in a controlled substance.
Tax attorney Paul McKenney, speaking to MLive reporter Garret Ellison, said similarly that the decision is “a real problem” for medical marijuana business owners, who may now find it impossible to reap profits from sales of the drug going forward.
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