IRS Fines Marijuana Merchants for Refusing to Commit a Felony
12th July 2014
State-licensed marijuana stores, which began serving recreational customers in Colorado at the beginning of the year and in Washington this week, are criminal enterprises under federal law. But as Al Capone could have told you, Uncle Sam still wants his cut: Selling marijuana is a felony, and so is failing to pay taxes on the money you earn by selling marijuana. The government does not make it easy to comply with federal tax laws, however. Section 280E of the Internal Revenue Code, for example, bars marijuana merchants from deducting standard business expenses (although they are, rather counterintuitively, allowed to deduct the “cost of goods sold,” including the cost of growing or obtaining marijuana). And when a business pays federal taxes withheld from employees’ paychecks, along with the employer’s share of payroll taxes, the Internal Revenue Service insists that it be done via the Electronic Federal Tax Payment System (EFTPS), which requires a bank account. Cannabusinesses have trouble obtaining bank accounts, what with being criminal enterprises under federal law. The IRS does not consider that a good excuse, so when marijuana merchants pay the monthly taxes in cash, they are charged a 10 percent penalty. That is how Allgreens, a Denver dispensary, ended up owing the IRS more than $20,000 in penalties.
Once again, tReason magazine airs its core philosophy that legal weed is a much more important issue than, oh, the government’s promotion of followers of an oppressive totalitarian ideology masquerading as a religion. In this case, however, they may have a point.
It’s not a rare thing for someone acquitted of a crime at the state level to be subject to double jeopardy by zealous prosecutors under some Federal ‘civil rights’ law. (‘Oh, that’s not real double jeopardy; it’s an entirely separate crime!’) This would appear to be a similar case where regulations (not law, regulations, which under the Imperial Presidency are even better than laws because they don’t have to go through that messy stuff with Congress) criminalize behavior that is in conformity with the law on a different level.
This is a classic situation in authoritarian states, in which doing something makes you a criminal and not doing the same thing also makes you a criminal. Our legal system is rapidly becoming such a system.