February 23, 2012

Medical Marijuana Advocates Fight For 280E Tax Code Reform

February 23, 2012
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IRS ogo
image via: dealbreaker.com

What Is 280E Reform?

Taxes are the new frontier for the federal war on medical marijuana. Going after the medical marijuana community via taxes will no doubt become more prevalent, especially if people don’t stand up and try to bring about reform. There is a great organization that is doing just that, and I encourage our readers to check them out – 280E Reform. Here is some info from their website:

Excessive and punitive British taxes were abhorrent to our country’s founders. Today, excessive and punitive U.S. taxes are being applied to our country’s medical cannabis providers. It’s called IRS Code Section 280E, and we’re here to reform it.

All businesses, even nonprofit dispensaries, pay taxes to the IRS each year. But there’s a disconnect between federal and state laws called IRS Code Section 280E. Designed to fight drug trafficking, the sweeping rule was put in place during the Reagan Administration, long before medical cannabis laws were passed in 16 states and the District of Columbia.

Legitimate medical cannabis businesses want and expect to pay their fair share of taxes. In addition to federal taxes, dispensaries also pay state and/or local taxes. However, the IRS is now using 280E to stop medical cannabis businesses from making standard business deductions, which leaves them with a crushing tax bill they cannot afford. In a growing number of audits, the IRS is leaving dispensaries no recourse but to shut down — or to move to the underground economy.

This punitive and outdated tax policy cannot stand. That’s why the 280E National Reform Defense Team seeks volunteers to help educate people about 280E’s threat to medical cannabis patients and providers. To develop a winning court strategy, we’re also asking supporters to contribute $10 or more to the 280E legal defense fund.

We invite you to follow us on Facebook and Twitter, or sign up for one of our 280E Reform Tax Seminars. You can attend the National Conference Call and hear our progress and remaining challenges by dialing 209-647-1000, password: 154639, each Friday at noon Pacific Time.


We are medical cannabis patients and providers, the professionals who advise them and supporters who share a grave concern that the IRS may end or severely erode safe access to medical cannabis.

In recent months, the IRS has used an obscure section of the Internal Revenue Code to levy multimillion-dollar back tax bills on medical cannabis providers. Section 280E imposes extremely high taxes by preventing medical cannabis providers from taking the normal and usual deductions allowed for all other businesses. These deductions include items such as rent, payroll, health insurance, etc.

Thousands of medical cannabis providers may be forced to close if they are unable to file and pay reasonable federal taxes, leading to a dramatic reduction in safe access for qualified patients. The 280E Reform campaign was launched to achieve tax equity and fairness for medical cannabis patients and providers.

The 280E Reform Team is comprised of volunteers, and we are asking for more volunteers to motivate, educate and inspire the public about this issue. Several key stakeholders are providing initial guidance and support, including:


California Cannabis Association, Sacramento

California NORML, San Francisco

CalPotNews.com, Fresno

Harborside Health Center, Oakland/San Jose

Henry G. Wykowski and Associates, San Francisco

Luigi Zamarra, CPA, Oakland

Nicole Lanzetti Design, Oakland

Steep Hill Lab, Oakland


Tayloe Marketing, Tampa


Remedy Compassion Center, Auburn


Braach Accounting Services, Missoula


Kaneabis – The Cannabis Industry From a Financial Perspective


Cannabis Defense Coalition

The CARE Wellness Center, Seattle

Conscious Care Collective, Seattle/King County

The CPC, Seattle

Dockside Cooperative, Seattle

The Joint Cooperative, Seattle

The Medicine Jar, Seattle

Steep Hill Lab, Seattle


Americans for Safe Access

National Cannabis Industry Association

How can I help?

The 280E Reform Campaign is actively seeking volunteers to motivate, educate and inspire the public and elected officials about this issue. If interested, please use our contact page.

We are also asking supporters to contribute whatever they can to the campaign, which will be used to build the organization and spread our message. Please click here to donate today.

Join us each Friday at noon Pacific time on our National Conference Call, where you can hear about the progress we have made and the challenges ahead.

Dial in: 209-647-1000
PIN code: 154639.

Full text of Sec. 280E

Title 26 is the Internal Revenue Code of U.S. tax laws. The complete reference is U.S. Code/Title 26/Subtitle A/Chapter 1/Subchapter B/Part IX/Section 280E. Common legal citations are 26 U.S.C. §280E and I.R.C. Sec. 280E.

The full text of Sec. 280E includes the parentheses as shown below:

“No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which
comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.”


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