News » IRS Hits Oakland Dispensary With Massive Tax Bill
October 5, 2011 by justin
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The IRS informed Harborside Health Center in Oakland, California that it owes a massive $2.5 million in back taxes for 2007 and 2008.
The source of this huge bill? The Internal Revenue Service prohibits medical marijuana dispensaries from taking the same deductions that most businesses are able to take advantage of. These deductions include employee payroll, insurance, rent, workers’ compensation and other operating costs.
This could be bad news for the dispensaries 94,000 patients – Harborside has indicated they may not be able to pay the massive bill and would be forced to close. To further compound matters, The IRS has indicated that they plan to audit tax returns from 2009 and 2010 as well when the total revenue grew from $7 million to $22 million – meaning an even larger bill could be on the way.
While the IRS declined to give a comment, Harborside executive director Steve DeAngelo was clear on his opinion.
“This is not an effort to tax us. We’re happy to pay our taxes,” he said. “This is an effort to shut us down.”
[source San Francisco Chronicle]
Tags: dispensary, Harborside Health center, irs, Oakland, Steve DeAngelo
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IRS Hits Oakland Dispensary With Massive Tax Bill
#mmj #mmot #weed #marijuana #cannabis
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Whoa, I thought that the Feds or the State couldn’t collect taxes from dispensaries due to controlled substances?
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By taxing them, aren’t the feds acknowledging the business? To deny deductions seems like an oxymoron.
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Why are you trying to bring logic into this?
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That’s exactly what I was wondering about as well, it really doesn’t make any sense at all. Looks to be another case of “We’re the government, FUCK YOUUUUU”…but then again what isn’t?
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>The Internal Revenue Service prohibits medical marijuana dispensaries from taking the same deductions that most businesses are able to take advantage of. These deductions include employee payroll, insurance, rent, workers’ compensation and other operating costs.
The article makes it sound like the IRS has had these “no deduction” rules for some time now, and it makes me wonder why the dispensary owners weren’t aware of them… It’s disappointing that the MMJ dispensaries don’t get the same privileges afforded to other businesses, but that’s no excuse for being oblivious to legal requirements in an already legally tumultuous area.
I would argue that this dispensary is setting a poor example for the rest of the nation. If the IRS regulations were in place back in 2007 when the MMJ folks were making money (millions of dollars in revenue, according to the article), it strikes me as completely foolhardy for them to, what, think that they won’t be caught. Let them be shut down and replaced by another dispensary that can dot every i and cross every t – that’s how we legitimize MMJ. Think about the articles that would be written praising this wonderful source of revenue if there was a scanned copy of a check for 2.5 million from the dispensary to Uncle Sam…preferably on hemp paper.
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The legal requirements at issue were added to the revenue code in the 80′s (remember Just Say No and the crack epidemic?) Cali passed prop 215 in 1996. SB 420 came years later. The IRS law in question was intended to apply to drug kingpins, traffickers, and criminal street gangs. Not licensed and regulated state business’s. The IRS are being dicks. And they are attempting to regulate (tax) these businesses right out of business by making them go bankrupt.
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fuck harborside
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[...] the IRS’s recent announcement that Oakland’s Harborside Health Center owed over $2.5 million in back taxes, the federal government has now [...]
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