IRS Lawyer Says They Are Not Targeting Cannabis Lawyers

Original Article National Law Jnl (paywall)

Tax Prof Blog reports

By Paul Caron

National Law Journal, IRS Lawyer Says the Agency Isn’t Targeting Cannabis Lawyers:

A regional IRS executive told a gathering of cannabis lawyers on Friday that the agency is not out to target them, despite their work with clients whose marijuana businesses remain illegal under federal law.

Matthew Houtsma, associate area counsel for the IRS Office of Chief Counsel, said the tax agency’s Office of Professional Responsibility has held that “to the extent [a lawyer] is representing someone in the industry, that is not sanctionable.”

Those lawyers’ clients, even though they’re abiding with state laws regulating medical and recreational marijuana, may not enjoy such protections from federal tax collectors. The IRS, Houtsma told the Cannabis Law Institute gathering in Denver, has won a string of recent court victories clarifying the agency’s authority to inspect records from and question tax deductions taken by dispensaries operating legally under certain states’ laws.

At issue is Internal Revenue Code Section 280E, which forbids businesses from deducting certain business costs associated with the “trafficking” of Schedule 1 substances, including marijuana, which the federal government has deemed have no medical use. Missing out on those tax deductions can wipe out a large part, or even all, of a marijuana businesses’ profits, according to tax attorneys. Taking the deductions can trigger an audit by the IRS.


Latino Lawmakers Endorse Legalizing Marijuana

A group representing Latino state legislators across the U.S. just endorsed legalizing marijuana and says current prohibition laws are part of a decades-long racist attack on their communities.

“Decriminalization of recreational marijuana will ease the burden off the criminal justice system and law enforcement agencies, allowing police officers, judges, and prosecutors to focus on violent offenses and other criminal activity more deserving of priority, and freeing-up space in prisons and decreasing the budgetary impact from keeping marijuana users incarcerated,” reads a resolution adopted on Wednesday by the National Hispanic Caucus of State Legislators (NHCSL). “Regulated marijuana retailing greatly hinders black-market drug dealers, prevents marijuana’s (unproven but widely alleged) use as a gateway drug, and directs much-needed revenue to legal business owners, states and local governments instead of organized crime.”

The resolution zeros in on the racist origins of marijuana prohibition.

“During the 1920’s and 1930’s, when it was first penalized in various states, cannabis use was portrayed as a cultural vice of Mexican immigrants to the United States, and racist and xenophobic politicians and government officials used cannabis prohibition specifically to target and criminalize Mexican-American culture and incarcerate Mexican-Americans and, therefore, the prohibition of cannabis is fundamentally rooted in discrimination against Hispanics,” it says.

More at


California Cannabis CPA sent out the following information today

Unincorporated Sonoma County is open for business!  Sonoma is now taking applications for medical and commercial Cannabis Businesses.  Read our latest guide to starting your business in wine country.

Looking for professional guidance getting your business started?  Need financial consulting for your established business?  We’re here to help, click here to get in touch with our team of Cannabis business consultants and tax advisors.

Check out these additional resources from our most recent blog posts:

  1. Medical Cannabis Applications are available for the City of Adelanto
  2. Opening a Marijuana Business in Orange County
  3. Cannabis Insurance – Everything you need to know. 
  4. The City of Bellflower has 12 Cannabis Licenses Available. 
  5. Starting a Cannabis Extraction Company in Southern California


Thanks to Andrew Sacks of SWD for referring us to the following LA Times piece

Sessions says he has ‘serious concerns’ about legal marijuana. Now states wonder what’s next

With thousands of jobs and billions of dollars at stake, it’s a burning question: Is Atty. Gen. Jeff Sessions preparing to mess with voter-approved sales of recreational marijuana?

It’s a question of prime importance in six Western and two New England states that have legalized marijuana use despite a federal law of the land classifying weed as a controlled, dangerous drug. And it appears Colorado, Washington, Oregon, California, Nevada, Alaska, Maine and Massachusetts are likely to get a lot of company.

Fourteen additional states are planning similar recreational-sale initiatives, possibly this year. The rush to legalize marijuana has been driven by the potential tax and economic boosts of an industry already generating an estimated $6 billion in annual sales. Twenty-nine states also have decriminalized or legalized medical marijuana.

Last year, while still a Republican senator from Alabama, Sessions made his opposition clear: He called weed dangerous and “not something to laugh about.” The government needs “to send that message with clarity — that good people don’t smoke marijuana.”

Full Story



Home delivery is currently allowed under temporary regulations through the state’s “early start” program, which launched July 1 when recreational sales started and runs until the end of the year. But when department officials met in late July they eliminated that service in the first and only draft of new regulations because of security concerns.

“We tried to come up with a structure that was fair to the businesses but also that protected public health and safety,” said Stephanie Klapstein, the Department of Taxation spokeswoman. “We considered the safety of anyone who would be involved, either directly or peripherally, in the delivery process.”

The regulation would stop about 20 of 60 dispensaries across Nevada — mostly in Las Vegas — currently offering home delivery of the plant for recreational use. Deliveries of medical marijuana would still be allowed under the drafted regulations.


All medical marijuana presentations and documents (except for the meeting minutes) for the August 10th Medical Marijuana Advisory Committee are now available on the committee webpage:

August 2017



NOTICE OF BOARD ACTION Board Interim Policy BIP-02-2014 Rescinded

The Washington State Liquor and Cannabis Board has rescinded Board Interim Policy BIP-02-2014 which limited persons or entities to interest in one (1) producer license, reverting to allowing a person or entity to hold an interest in up to three (3) producer licenses as provided in WAC 314-55-075.

What does this mean

  • Persons or entities may hold interests in up to three (3) producer licenses.
  • Additional interests in producer licenses may be accomplished through adding true parties of interests or assumptions of existing licensed businesses only (through purchase of a business, formation of a new partnership with an existing licensee, etc.). No new application window is being opened at this time.
  • The licensing vetting and approval process must be completed prior to any transfer of ownership, funds, or interest, consistent with Chapter 314-55 WAC. More information is available on the WSLCB website, here:
  • Co-locating producer licenses is not allowed.
  • Rescinding BIP-02-2014 does not affect those applications currently being processed.

This notice can be found at under Interim Policies.


NOTICE OF RULE MAKING – Emergency Rules – #17-18

The Washington State Liquor and Cannabis Board filed Emergency Rules with the Code Reviser’s Office for Chapter 314-55 WAC.

The board approved refiling emergency rules for WAC 314-55-108, Pesticide action levels to continue requirements until permanent rules become effective. The rules become effective today, August 9, 2017, and expire when permanent rules take effect on August 31, 2017.

This notice and copy of the emergency rule can be found at under Recently Adopted Rules.


NOTICE OF BOARD ACTION: Withdrawal of Producers Licenses and Tiers CR-102

The Washington State Liquor and Cannabis Board took action today and withdrew the proposed rules (CR-102) for the Producers Licenses and Tiers rulemaking filed as WSR 17-12-116. The Board has determined not to proceed with consideration of the proposed rules as drafted at this time.

The Board will continue to evaluate the industry and amount of marijuana produced to determine if additional rule changes are warranted at a later date or incorporate other rule changes contained in this proposal, such as changes needed as a result of 2017 legislation, into other rulemakings currently underway.

This notice can be found at under Proposed Rules.
Please contact the Rules Coordinator at with questions.

NOTICE OF RULE MAKING – Emergency Rules – #17-19

The Washington State Liquor and Cannabis Board filed Emergency Rules with the Code Reviser’s Office for Chapter 314-55 WAC.

The board approved emergency rules for WAC 314-55-1025 and 314-55-1035. The rules become effective today, August 9, 2017, and will expire when permanent rules become effective on August 31, 2017.

This notice can be found at under Recently Adopted Rules.