The IRS Is Coming! Are Medical Marijuana Dispensaries Ready?


280E Reform

​The Internal Revenue Service is threatening to turn back the clock on medical marijuana. But now a national alliance of industry leaders, patients and elected officials is fighting back with a new project aimed at education and policy change.

The 280E Reform effort says it plans to bring an end to the current IRS campaign to close medical cannabis dispensaries.

The IRS campaign of aggressive audits — sometimes resulting in collectives being held responsible for millions in supposed back taxes — began a couple of years ago and uses Section 280E of the IRS code to deny dispensaries the ability to claim any legitimate business expenses. Denied expenses include essential items such as rent, payroll, and all other necessary business expenditures.

Northern California Medical Marijuana Resource

​​These denials result in huge back tax bills for the affected dispensaries that, if not changed, threaten to destroy the financial viability of every medical marijuana dispensary in the country — thereby putting an end to safe and affordable access to cannabis for medically qualified patients.
Section 280E was passed by Congress in 1982, 14 years before California passed the nation’s first medical marijuana law, and was intended to apply to illegal drug trafficking. Last year, U.S. Rep. Pete Stark (D-California) introduced the Small Business Tax Equyity Act (HR 1985), which would create an exception to 280E for legal medical marijuana businesses, allowing them to take the full range of business expense deductions on their federal tax returns.
With the looming fear that these audits will eventually shut down all legally operating medical marijuana dispensaries operating according to state laws — with some paying taxes for years — time is getting short, according to campaign spokesperson Steve DeAngelo of Harborside, which the IRS claims owes millions of dollars in back taxes.
“Should the IRS campaign be successful, it will throw millions of patients back into the hands of street dealers, eliminate tens of thousands of well-paying jobs, destroy hundreds of millions of dollars in tax revenue, enrich the criminal underground, and endanger the safety of communities in the 17 medical cannabis states.”

Chronic Fatigue
Steve DeAngelo, 280E Reform: “Should the IRS campaign be successful, it will throw millions of patients back into the hands of street dealers”

​In response to these dangers, the 280E Reform project is announcing a national campaign to bring awareness to legislators, provide legal and tax counsel for threatened dispensaries and prepare a grassroots educational effort to enlighten the public on the need to reform 280E.
“We are going to challenge this tax code to make sure that patients all over America have the ability to safely fill their health care needs with safe access from medical cannabis providers whoa re operating clearly with state laws,” said lead tax attorney Henry Wykowski. “This is a public safety issue and a healthcare right.”
An impressive team has been assembled to lead this effort, including Don Duncan, cofounder of Americans for Safe Access (ASA) and medical marijuana activist who has been featured on 60 Minutes, Dan Rather Reports and in the Los Angeles Times; Henry Wykowski, legal tax counsel who successfully defended CHAMP in a similar IRS audit; Troy Dayton, cofounder of Students for Sensible Drug Policy (SSDP), former senior development officer of the Marijuana Policy Project (MPP) and current CEO of ArcView Group; Amir Daliri, entrepreneur and cofounder of California Cannabis Association and president of CannLobby, LLC, a medical marijuana focused political consultancy; and Steve DeAngelo, executive director of Harborside Health Center and activist whose accomplishments include the passage of Proposition 59, the Washington, D.C., medical marijuana initiative.
(DeAngelo, Duncan, Dayton, Daliri — what’s with all those D’s? I guess Wykowski should consider himself lucky to be the only non-D in the press release.)
A University of Maryland graduate (summa cum laude), DeAngelo is a charter member of Americans for Safe Access and co-creator of Hemp Tour and Ecolution Inc., which produced hemp clothing and accessories. He is the star of the Discovery Channel series Weed Wars.

Workshops Announced

“The IRS Is Coming! Are You Ready?”
IRS tax audit seminars to aid medical marijuana dispensaries on “how to get ready” will be on February 25 from 1-6 p.m. at the Main Ballroom of Just Dance, 2500 Embarcadero, Oakland, California.
The same workshop will be held again on March 10, 1-6 p.m., at the Courtyard Marriott, 925 Westlake Ave. N., Seattle. You can enroll online at or call (206) 466-1766.
About 280E Reform

The 280E Reform campaign is professionally managed and is committed to open communication and transparency.
A national conference line is set up every Friday and is broadly published. The time is used to share with any interested parties the progress of the group.
The call is every Friday at 12 noon PST, and can be accessed by dialing 209.647.1000; PW: 154639.