Tax Court Slams Medical Marijuana Industry

By James Donahue

As it was with slavery over a century ago, the issue of state’s rights vs. federal power has now centered on the medical marijuana issue. While more and more voters have approved ballot issues allowing citizens to grow, use and sell marijuana as medicine, the plant remains illegal in the eyes of the federal government.

Medical marijuana shops have been springing up in states like California, Arizona, Michigan and New Jersey since these and 14 other states legalized medical marijuana for use as effective treatments for migraines, glaucoma, nausea, multiple sclerosis and a variety of other ailments.

But the Internal Revenue Service, a powerful arm of the federal government, now stands ready to slam the doors on these shops thanks to a recent ruling by the U. S. Tax Court in Washington, D.C.

In the case against the Vapor Room Herbal Center in San Francisco, the tax court ruled the business may not declare business deductions on income tax returns. In the eyes of the federal government the business is trafficking in a controlled substance. Armed with this ruling, the IRS is now in the business of auditing marijuana dispensaries not only in California, but where ever they exist.

The marijuana issue has become as controversial as alcoholic drinks were during the dark days of prohibition in the United States. While the federal government enforced laws that made the production, possession and use of the substance illegal, they both remained a popular recreational drug. Marijuana is basically a weed that grows almost anywhere in the world. It was long treasured as a hemp plant used in the production of fine paper, clothing and rope used on sailing ships. Certain varieties of the cannabis plant have been carefully refined and cultured to produce intense quantities of tetrahydrocannabinol, or THC, a psychoactive chemical that produces a mild sensation of euphoria among users.

While included among the government’s list of "controlled substances," marijuana has never been classified as a narcotic. In fact, researchers have found that THC has a calming effect on users and has never been linked to violent actions or death like alcoholics experience. Strangely, alcohol remains a legal drug that can be easily purchased over the counter by adults, while the mere possession of marijuana can land a person in jail and possibly prison if the quantity is large enough.

That voters in 17 states have called for the legalization of marijuana, and the number of states taking action like this increases almost yearly, strongly suggests that a lot of people are using marijuana for both medical and recreational purposes, and they favor its legalization.

Why won’t the U.S. Attorney General’s office relax the federal rules against marijuana? Follow the money. While we are not suggesting the Eric Holder is in linked to an organized crime syndicate, we believe there is a strong lobby from the pharmaceutical industry to make the plant difficult for the average citizen to grow and use. That is because THC has been synthesized in pill form that can be dispensed by prescription at any drug store.

That’s right, there is a lot of money to be made by not only the pharmaceutical industry, but the gangsters that produce marijuana in secret places and then sell it for big profits on the streets all over America. The business of the War on Drugs in the United States maintains steady employment for narcotics officers who seek out and raid the marijuana found growing in farm corn fields, woodlands and under artificial lighting in homes and warehouses. It provides good paying jobs for the court workers and the jails and private prisons where people caught and charged with the manufacture and distribution of marijuana are sent for "punishment."

Remember how organized mobs got involved in the production of illegal liquor during the days of prohibition. The problem was that the gangs began competing for "territory" and started having aggressive gang wars. The mass street killings and the fact that most Americans were consuming alcohol anyway eventually led to the end of prohibition.

We suspect that the movement to legalize marijuana in the United States will eventually be successful as well.

A pending lawsuit, Americans for Safe Access v. Drug Enforcement Administration, calls for the DEA to reschedule marijuana. But the litigation, even if successful, appears to only favor the pharmaceutical industry, making research with THC for the development of potential new drugs possible.

Also Democratic Congresswoman Barbara Lee of California has introduced the States Medical Marijuana Property Rights Protection Act, a bill designed to stop the Department of Justice from going after dispensaries' landlords through asset forfeiture laws.

Thus it appears the battle over the people's rights to produce and use marijuana has only begun.

Those in power do not want folks growing their own medicine in their back yards and thus avoiding a trip to their doctor to get a prescription to buy pills that treat the same ailments.