Law Firm Challenges IRS’ Power Over Cannabis Industry
[dropcap class=”kp-dropcap”]A[/dropcap]ccording to a Colorado-based law firm, the Internal Revenue Service (IRS) is overstepping its bounds by claiming sole authority to determine which cannabis-related businesses are breaking federal law.
Per Section 280E of the Internal Revenue Code, countless businesses have been targeted by tax auditors, and at times, their businesses have been destroyed because of it. It prevents cannabis-related businesses from deducting critical business expenses that are incurred.
On July 3, a panel determined that the IRS can continue to revoke privileges on business people, regardless of whether or not they have been convicted of a drug crime. Thorburn Walker recently asked the U.S. Court of Appeals for the Tenth Circuit to revisit its decision last month in Alpenglow Botanicals v. United States of America.
The father and son behind Alpenglow Botanicals were found to owe the IRS $53,000. The team, Charles and Justin Williams, argued that Section 280E violates the Eighth and Sixteenth amendments.
“The court has taken the unprecedented step of empowering the IRS to not only investigate nontax crimes for tax administration purposes but to administratively determine that the crimes have been committed,” Attorneys James Thorburn and Richard Walker wrote in a rehearing petition. “No court has previously given the IRS such administrative power.”
The same legal team challenged the IRS earlier this year under Standing Akimbo v. United States of America. In another case, Green Retail Solution v. United States of America, Green Retail Solution’s legal team was unable to challenge the IRS’ authority.
Attorneys James Thorburn and Richard Walker argue that the IRS shouldn’t hold so much power. The tax code also prevents patients from covering cannabis medications, forcing them to pay out-of-pocket. According to a recent article in Forbes, one simple change to Section 280E could drastically change the way cannabis businesses, and the patients they serve, are treated in America.
