By Steve Elliott
In a huge blow to the newly legal marijuana industry, the IRS has convinced the Ninth Circuit Court of Appeals that marijuana dispensaries can't deduct business expenses, and must pay taxes on 100 percent of their gross income, reports Robert W. Wood at Forbes.
Almost every business in the United States pays taxes only on net profits, after expenses. But marijuana businesses are different -- they must pay taxes on gross profits, according to a Ninth Circuit federal court decision on Thursday, reports Paul L. Caron at the TaxProf Blog.
The court affirmed than the Internal Revenue Service's Section 280E prevents a San Francisco medical marijuana dispensary from deducting ordinary or necessary business expenses because its Vapor Room is a "trade or business ... consist[ing] of trafficking in controlled substances ... prohibited by Federal law." [Olive v. Commissioner, No. 13-70510 (July 9, 2015)