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News Link • States' Rights

With latest ruling, IRS threatens to crush the whole medical marijuana industry


The Internal Revenue Service (IRS) is on the verge of shutting down California’s largest medical marijuana dispensary, and with it potentially the entire semi-legal pot industry.

The Harborside Health Center in Oakland — which was going to be the subject of a Discovery Channel reality show called “Weed Wars” — now owes the IRS $2.5 million in back taxes, thanks to the recent enforcement of a federal law that prohibits organizations that traffic in “controlled substances” from taking tax deductions.

Those deductions, for things like payroll, workers’ compensation insurance and the like, were taken by Harborside in 2007 and 2008, meaning they owe significantly over the roughly $500,000 Harborside paid in federal taxes both years. Harborside also paid the city of Oakland about $1.1 million and the state of California another $2 million. Just last week owner Steve DeAngelo presented the city with another $360,483 tax payment, and even sent out a press release about it.


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