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Right when you think we’re making significant progress with medical marijuana in this country, we have set backs like what’s about to go down in California. Apparently the federal government feels they need to tax the California medical marijuana industry more because they have the belief that all dispensary owners are wealthy tax evading drug dealers. This, however, is not the case and Oakland’s Harborside Health Center, one of the biggest dispensaries in Oakland, is about to get taxed more than $2 million because of a ruling that said collectives are not allowed to write off normal business expenses.
The agency did deny $2 million in deductions the dispensary took during both years for, among other things, security, lab testing, licensing fees, and employee health insurance.
That kind of taxation can and will put Harborside and many other dispensaries out of business. So even though Oakland dispensaries are already required to pay a 5% tax on top of the state sales tax, this somehow wasn’t enough to the federal government. Their strategy in this time of tight spending budgets nationwide is taxing them more rather than let’s say allowing more to open (legit ones of course) and taxing them all just as they were before. The top four dispensaries in Oakland contributed close to $2 million to the state of California’s budget.
Steve DeAngelo, owner of Harborside Health Center and other owners, who pay their taxes and have always abided by state laws, are being unfairly targeted. The IRS feels a strong desire to tax them more because they think they’re all millionaires and this is essentially going to run them out of business and fast. Mr. DeAngelo estimates that if he is no longer able to write off these expenses, similar to every other business, he will be out of business in a year.
I’m hoping that this is going to be appealed and won’t end up happening but we’ll have to see.