An Oakland cannabis company’s tax fight with the Internal Revenue Service is being closely watched by industry insiders throughout California. Although it’s been two years since recreational cannabis sales became legal in California, marijuana businesses are still – at least in the eyes of the IRS – sizable drug traffickers.
Our Los Angeles marijuana tax lawyers know that taxes are a major sore point for many pot shops throughout the Golden State – starting with the fact that local and state government taxes have sapped many businesses of the ability to fairly compete with the cheaper, thriving black market.
Taxation by the federal government is a whole different beats entirely. The U.S. Controlled Substances Act still categorizes marijuana as a dangerous Schedule I narcotic, criminalizing marijuana possession, sale and cultivation. This is true regardless of state law, though federal officials have struck a tenuous peace with state-legal operations with annual federal spending bills that stipulate the U.S. Department of Justice isn’t to use taxpayer funds to go after operations in compliance with state cannabis laws. But that doesn’t provide any relief where the IRS is concerned. Continue reading