Bay Area Congressman Backs Medical Marijuana in IRS Tax Struggle

By Chris Roberts
|  Thursday, May 26, 2011  |  Updated 4:08 PM PDT
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Bay Area Congressman Backs Medical Marijuana in IRS Tax Struggle

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One California congressman wants to change the way marijuana is taxed.

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You know what they say about death and taxes. But for California's medical marijuana dispensaries, the annual dance with the IRS is about to get easier, if a Bay Area congressman has his way.

Every merchant in the country can deduct the cost of goods sold from its annual tax form... everyone except, that is, medical marijuana dispensaries. A 29-year old clause in the tax code has effectively prohibited cannabis collectives and pot clubs from deducting the cost of their medical marijuana, meaning many dispensaries have been whacked with huge past-due bills by the IRS.

Rep. Pete Stark, D-Fremont, wants to change all that. With a Republican co-sponsor in Rep. Dana Rohrabacher from Southern California, Stark introduced in the United States Congress on Wednesday an update to the tax code that would specifically allow dispensaries to deduct the cost of their medical marijuana, according to SF Weekly.

"While unfair to these small business owners, the tax code also punishes the patients who rely on them for safe and reliable access to medical marijuana prescribed by a doctor," Stark says of his bill, the Small Business Equity Tax of 2011.

Stark's exception allows "amounts paid or incurred in connection with the trade or business consisting of sales marijuana ... intended for patients for medical purposes pursuant to the laws of a state" to be deducted from taxes.

A radical stance? Probably not: Stark's East Bay constituents include many dispensaries, and the same with Rohrabacher, whose district includes southern Los Angeles County and most of Orange County.

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