CNN Money:  “entrepreneurs in the nascent medical marijuana industry face a unique burden: an effective federal income tax rate that can soar as high as 75%.   The hefty levy is the result of a 1982 provision to the tax code, known as 280E, . . . . the rule bars those selling illegal substances from deducting related expenses on their federal income taxes. . . . Jim Marty, an accountant in Colorado specializing in medicinal marijuana tax law, said he has one client that didn’t turn a profit in 2009, 2010 or 2011. In 2012, though, she was handed a $300,000 tax bill from the IRS for those three proceeding years.”

For more on Section 280E read:

  1. IRS tells California Medical Marijuana Dispensary it Owes Millions in Unpaid Taxes
  2. IRS Claims Harborside Health Center Owes $2.5 Million in Back Taxes on Sales of $22 Million
  3. Feds’ Pot Response Differs in California, Colorado
  4. People Experienced with Internal Revenue Code Section 280E
  5. California wants Marijuana Shops to Pay Back Taxes