Originally published on Forbes.com.
Just a short update.
Last week I wrote about The Green Solution, at least by its own account Colorado’s #1 Marijuana dispensary. It was resisting an IRS summons based on the notion the Code Section 280E, which denies marijuana sellers ordinary and necessary business deductions, inappropriately puts the IRS in the drug busting business. Things did not go well for The Green Solution as the Tenth Circuit ruled that the anti-injunction act applied allowing the IRS to proceed. Now another shoe has dropped.
High Desert Relief Inc is a Non-Profit Licensed Producer for the Medical Cannabis program for the State of New Mexico. High Desert has also been resisting an IRS summons. The US District Court for New Mexico has just told them, that they are done.
Subsequent to the parties’ briefing, on May 2, 2017, our Tenth Circuit issued its decision in Green Solution.2 The Court held that the Anti-Injunction Act deprives federal courts of jurisdiction over Green Solution’s suit to “enjoin the Internal Revenue Service (IRS) and related parties from investigating Green Solution’s business records.” Green Solution Retail, Inc. v. United States, . Next, the Court rejected Green Solution’s argument that the Anti-Injunction Act did not apply because “the IRS was acting outside its authority in investigating whether Green Solution trafficked in a controlled substance, which claims is a criminal investigation properly carried out by the United States Attorney.” ….
Our Tenth Circuit’s decision in Green Solution moots the present Motion.
All you lovers of the Constitution need to pay attention here. On this issue conservatives are for federal supremacy and liberals are for states rights. My own view is that activists and advocates use the Constitution like a drunk uses a lamppost – More for support than illumination – but that’s just me. I do think that the IRS probably shouldn’t make Code Section 280E enforcement a high priority. It violates Reilly’s First Law of Tax Policy – Make tax policy the Switzerland of the culture war.
By the way, I really have to compliment the marijuana dispensaries on coming up with cool names like The Green Solution and High Desert Relief. Back in the day, it was like Joe’s dorm room and the laundromat on Highland Street. That is what I heard anyway.