Tax laws on medical marijuana hazy


No one claims that laws must be consistent. Consider the situation surrounding medical marijuana. 

The use of medical marijuana is currently legal in 18 states and the District of Columbia. However medical marijuana dispensaries are still subject to strict tax restrictions under Section 280E of the Internal Revenue Code. 

This law, enacted in 1982, prohibits “deductions incurred in the trade or business of trafficking in controlled substances.” As a result, medical marijuana dispensaries are unable to claim a federal income tax deduction for standard business expenses like rent, payroll, product or advertising. 

However, income from the sale of medical marijuana is taxable since there is no exception in the law providing that it is excludable from income.

“Some of my finest hours have been spent on my back veranda, smoking hemp and observing as far as my eye can see.” – Thomas Jefferson