DEA, FBI Sic IRS on Medical Marijuana Facilities

When Michigan voters approved growth, production and sale of medical marijuana in 2008, they got a taste of what California and other legal medical marijuana states have been dealing with for years. Under review are IRS tax laws concerning medical marijuana.

The Drug Enforcement Administration and FBI have been strong-arming banks to investigate an activity they might deem “suspicious” on the part of medical marijuana facilities. Banks in northern California were told recently by the DEA to keep an eye on customers who may be working in the medical marijuana trade.

For some banks, the effort to comply with nebulous crackdowns on a legalized trade is proving tedious. With federal agencies seeking to regulate commerce in an approved trade, it’s too much hassle (and possibly illegal) for banks to track investor and customer activity.

Medical marijuana is legal in California and now Michigan. These seemingly clandestine espionage behavior on the part of government agencies against legal medical marijuana producers and merchants angers many residents.

Now the IRS is reviewing tax laws under which medical marijuana facilities fall. The IRS is making a concerted effort to audit all enterprises engaged in medical marijuana activities. If the feds can’t bust medical marijuana one way, they’ll find another. Allen St. Pierre, executive director of NORML (National Organization for the Reform of Marijuana Laws) told Michigan Messenger that the IRS taxation issue is just one prong of a three-way push to take out medical marijuana.

St. Pierre said phase one was to go after doctors who prescribed medical marijuana, in 1996 when California first legalized it. Conant v. McCaffrey made that action unconstitutional. Now the IRS is claiming that medical marijuana should be taxed.

Drugs and medications are not taxed. Having obtained the status of legal drug, medical marijuana can not be taxed the facilities that produce drugs (and hence medical marijuana) are taxed. Currently, medical marijuana facilities are side-stepping many taxes. The IRS is saying they can’t have their cake and eat it too: Medical marijuana dispensaries can’t have recognition of the pot they sell as a legal drug along with non-taxable status.

NORML is initiating a series of five marijuana reform bills including several decriminalization measures, a ” Truth in Trials” act – permitting medical marijuana to be considered in federal drug trials (right now, it’s not) and a bill to relegate marijuana to Schedule II drug. Currently, marijuana is a DEA Schedule 1 drug (highly addictive with no accepted medical use).

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