TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, November 9, 2017

IRS Power Is Challenged In Marijuana Dispensary's Supreme Court Petition

National Law Journal, IRS Power Is Challenged in Marijuana Dispensary's Supreme Court Petition:

The IRS has no authority to declare that a taxpayer has violated federal anti-drug laws, a Colorado marijuana dispensary tells the U.S. Supreme Court in a new petition that takes the justices into a dispute over state legalization schemes and federal taxation.

The Green Solution Retail Inc., one of the largest retail marijuana chains in Colorado, petitioned the high court this week to overturn a U.S. Court of Appeals for the Tenth Circuit ruling in May that said federal law bars lawsuits challenging tax assessment activities. ...

The petition quoted heavily from then-Tenth Circuit Judge Neil Gorsuch’s 2015 opinion in Feinberg v. Commissioner of Internal Revenue. Now a Supreme Court justice, Gorsuch noted in that ruling, which upheld an IRS decision to strike business tax deductions taken by a Colorado dispensary, the federal government’s “mixed messages” on marijuana enforcement.

Green Solution’s 2013 and 2014 tax returns are the centerpiece of the dispute. The IRS audited the filings and determined that the company, though operating legally in Colorado, violated federal drug trafficking laws. The IRS demanded company financial records to determine if Green Solution improperly took credits and deductions that are not available to illegal drug merchants. Green Solution sued to keep the IRS out of its books, arguing the agency has no right to determine whether it broke federal drug laws.

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If you want to petition for certiorari, you really should have an appellate specialist do it. Very sloppy work.

Posted by: Jeff | Nov 9, 2017 10:29:10 AM