Thursday, February 18, 2016
Benjamin Leff (American) presents Taxing Governmental Marijuana Sales at Indiana-Bloomington today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:
This Article is the first to address whether independent governmental affiliates that sell marijuana are exempt from federal income tax under section 115 of the Internal Revenue Code. In the first section, I discuss the three legal requirements for tax exemption under section 115, and how these three requirements are likely to apply to a public development authority like the Cannabis Corner. In the second section, I discuss whether a government affiliate that sold marijuana might be denied tax-exempt status even if it met all the requirements of section 115 under the so-called “public policy” or “illegality” doctrine. In both these sections, I argue that it should be relatively easy for a public development authority or other governmental affiliate to sell marijuana exempt from federal taxes.
In the final section, I discuss the benefits of recognizing federal tax exemption for governmental affiliates that sell marijuana.