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Deductions on a Higher Plane: Medical Marijuana Business Expenses

Lexis Federal Tax Journal Quarterly, September 2013

Wake Forest Univ. Legal Studies Paper No. 2333969

15 Pages Posted: 2 Oct 2013  

Joel S. Newman

Wake Forest University - School of Law

Date Written: 2013

Abstract

A discussion of the income tax deductibility of business expenses in the marijuana industry. Emphasis is placed upon those states in which medical marijuana, and now recreational marijuana, is legal under state law, even though it is still illegal under federal law. Current litigation, including the appeal of Olive v. Commissioner to the Ninth Circuit, is addressed.

Internal Revenue Code Section 280E, which denies business deductions other than costs of goods sold for those who traffic in controlled substances, should be repealed. Moreover, marijuana, in light of its documented medical use, should be removed from the schedule of controlled substances. Finally, until these steps are taken, the IRS and the Department of Justice should leave the medical and recreational marijuana industry alone.

Keywords: Taxation, Medical Marijuana, IRC 280E

Suggested Citation

Newman, Joel S., Deductions on a Higher Plane: Medical Marijuana Business Expenses (2013). Lexis Federal Tax Journal Quarterly, September 2013; Wake Forest Univ. Legal Studies Paper No. 2333969. Available at SSRN: https://ssrn.com/abstract=2333969

Joel S. Newman (Contact Author)

Wake Forest University - School of Law ( email )

P.O. Box 7206
Winston-Salem, NC 27109
United States

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