By David Ferguson
Sunday, March 13th, 2011
It may be the IRS and not the DEA that puts the Marin Alliance for Medical Marijuana out of business. Alliance founder Lynette Shaw was stunned when the IRS audited her 2008 and 2009 tax returns and disallowed the foundation’s business deductions, then demanded millions of dollars in back taxes.
The IRS is taking advantage of § 280E of the federal tax code, which states that no business deductions will be allowed for companies “trafficking in controlled substances”.
Medical marijuana has been legal in California since the passage of Proposition 214 in 1996, but according to federal law, marijuana is classified as a schedule I controlled substance. Schedule I narcotics are not considered to be legitimate for medical use.