Legalize Marijuana for the Taxes? It’s no Pot of Gold

Arizona Republic:  “Proponents arguing that Arizonans should vote for this initiative dangle before voters the prospect that marijuana, once “regulated like alcohol,” will bring in massive tax revenues: between $40 million and $113 million, as reported by The Arizona Republic, if the act goes into effect. But these estimates fail to account for the undercutting effect of Arizona’s medical-marijuana market on the sale of recreational marijuana.  Unless Arizona does something to rein in medical marijuana taxation, it’ll just be chasing smoke.

By |2016-06-23T19:04:15-07:00June 21st, 2016|Stories & Articles, Tax Issues|Comments Off on Legalize Marijuana for the Taxes? It’s no Pot of Gold

Ultra Health Denied Balloon Fiesta Sponsorship

Albuquerque Business First:  “Ultra Health, a regional medical cannabis company with six locations in New Mexico, has been denied a sponsorship at the Albuquerque International Balloon Fiesta this year.  ‘We didn’t fit the profile of what they wanted in balloon sponsorship,’ Duke Rodriguez, CEO and president of Ultra Health, told Business First. “They didn’t feel it’s appropriate for a family-style event.”

By |2016-06-23T19:19:40-07:00June 20th, 2016|Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Ultra Health Denied Balloon Fiesta Sponsorship

Medbox’ Vincent Mehdizadeh Issues Letter to Pineapple Express, Inc. Shareholders

NASDAQ Globe Newswire:  “Over the last few years I have been the subject of an SEC investigation surrounding a prior venture, Medbox, Inc. during 2012-2014. . . . I received bad advice from the company’s [Medbox’] attorney . . . . I have become a target for any alleged missteps Medbox’s accountants, CFO, and auditor may have made, which was both caused and worsened by the incompetent attorney’s advice . . . . Given the Medbox circumstances and a curious trading suspension handed down by the SEC on PNPL securities, it appears that any venture that I’m actively involved with may be targeted unjustly.”

By |2016-06-23T19:14:31-07:00June 20th, 2016|Medbox, Stories & Articles|Comments Off on Medbox’ Vincent Mehdizadeh Issues Letter to Pineapple Express, Inc. Shareholders

DHS Names 31 CHAAs for New Medical Marijuana Dispensary Licenses

The table below lists the 31 CHAAs in which the Arizona Department of Health Services is offering to grant new Arizona medical marijuana dispensary licenses beginning July 18, 2016 and ending on July 29, 2016.  New dispensary licenses will be granted only in the CHAAs listed below.

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By |2017-02-04T07:33:04-07:00June 17th, 2016|CHAAs, Dept Health Services, Stories & Articles|Comments Off on DHS Names 31 CHAAs for New Medical Marijuana Dispensary Licenses

Microsoft is Serving the Legal Marijuana Trade

New York Times:  “As state after state has legalized marijuana in one way or another, big names in corporate America have stayed away entirely. Marijuana, after all, is still illegal, according to the federal government.  But Microsoft is breaking the corporate taboo on pot this week by announcing a partnership to begin offering software that tracks marijuana plants from “seed to sale,” as the pot industry puts it.  The software — a new product in Microsoft’s cloud computing business — is meant to help states that have legalized the medical or recreational use of marijuana keep tabs on sales and commerce, ensuring that they remain in the daylight of legality.

By |2017-02-04T07:33:04-07:00June 17th, 2016|Stories & Articles|Comments Off on Microsoft is Serving the Legal Marijuana Trade

Recreational Cannabis — Section 280E and Tax Efficient Structuring

Lane Powell PC:  “Section 280E provides: ‘No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.’ Section 280E will cease to apply to cannabis businesses if and when cannabis is no longer classified as a Schedule I or Schedule II controlled substance.

Cannabis businesses have developed two approaches to minimize the impact of section 280E:  First, taxpayers have tried separating their trade or business activities into two sets of businesses: businesses that consist of “drug trafficking” and businesses that do not. . . . The second approach to minimizing the impact of section 280E is characterize as many costs as possible as COGS rather than operating expenses.

By |2016-06-23T19:32:58-07:00June 15th, 2016|Stories & Articles, Tax Issues|Comments Off on Recreational Cannabis — Section 280E and Tax Efficient Structuring

One Marijuana Legalization Group Targets Another

Tucson.com:  “Unable to qualify for the ballot this year, organizers of one of the initiatives to legalize recreational use of marijuana in Arizona are now trying to defeat the remaining measure. Arizonans for Mindful Regulation has quietly shelved its plans to put its proposal on the November ballot. . . . Medar and his allies are forming a political committee to try to persuade voters to reject the other initiative. That measure, pushed under the banner of the Campaign to Regulate Marijuana Like Alcohol, is virtually certain to make the ballot.”

By |2016-06-15T06:39:15-07:00June 15th, 2016|AZ Legislation, Stories & Articles|Comments Off on One Marijuana Legalization Group Targets Another

1 Arizona Marijuana Legalization Group tries to Torpedo Another

Tucson.com:  “Unable to qualify for the ballot this year, organizers of one of the initiatives to legalize recreational use of marijuana in Arizona are now trying to defeat the remaining measure. Arizonans for Mindful Regulation has quietly shelved its plans to put its proposal on the November ballot. . . . Medar and his allies are forming a political committee to try to persuade voters to reject the other initiative.”

By |2016-06-23T19:37:30-07:00June 14th, 2016|Stories & Articles|Comments Off on 1 Arizona Marijuana Legalization Group tries to Torpedo Another

Stakes Are High As Medical Marijuana Test Case Heads To Tax Court

Forbes:  “A test case challenging the Internal Revenue Service (IRS) interpretation of expenses related to the sale of medical marijuana is headed to court: on Monday, June 6, Harborside Health Center, the country’s largest medical marijuana dispensary, will be in Tax Court to argue the application of section 280E of the Internal Revenue Code.  Under current federal law, marijuana is classified as a Schedule I drug, putting it in the same category as heroin, . . . the IRS sent Harborside a bill for $2.4 million. The reason for the tax bill? The IRS declared Harborside (and thus all medical marijuana dispensaries) to be drug trafficking organizations (DTOs) and therefore subject to a special tax rule found at Section 280E of the tax code. That rule says that expenses connected with the sale of certain illegal drugs – including Schedule I drugs, like marijuana – are disallowed

By |2016-06-15T06:44:42-07:00June 5th, 2016|Stories & Articles, Tax Issues|Comments Off on Stakes Are High As Medical Marijuana Test Case Heads To Tax Court

Application Period for New Arizona Medical Marijuana Dispensaries Begins July 18, 2016

The Arizona Department of Health Services announced on June 1, 2016, that it will accept applications for new Arizona medical marijuana dispensaries starting on July 18, 2016, and ending on July 29, 2016.  My contact at DHS says there will be 31 dispensary licenses available.  Here is the text of the DHS announcement:

The Department will accept dispensary registration certificate applications from July 18 – July 29, 2016. During this allocation, 31 dispensary registration certificates will be available. The “record date” for the allocation will be May 31, 2016. Because there are no available counties as of the record date, the Department will not allocate certificates under R9-17-303(B)(1). The top 31 CHAAs prioritized under R9-17-303(B)(2) will be made available by June 6. Any certificates not allocated under R9-17-303(B)(2) will be allocated under R9-17-303(B)(3).

At least 30 days before it begins accepting applications, the Department will announce (1) the dates during which applications will be accepted, (2) the number of dispensary registration certificates that will be available for the Summer 2016 allocation, and (3) the county(ies) and CHAAs in which dispensary registration certificates will be issued under the first two steps described below. The “record date” for the Summer 2016 allocation will be May 31, 2016. This means that changes in data variables affecting allocation priority which occur after the record date will not be considered for the Summer 2016 allocation.

Applications will be accepted for 10 consecutive business days. Thereafter, the Department’s review and allocation time frames will comply with R9-17-107.

The allocation process will follow these criteria:

  1. The Department will first determine whether there is a county in which a dispensary registration certificate does not exist. If so, the Department will publicly identify that county and allocate one dispensary registration certificate within each identified county according to R9-17-303(B)(1).

    [Richard Keyt’s comment: Every Arizona county has at least one medical marijuana dispensary so this criteria does not apply.]
  2. The Department will next prioritize the state’s 126 CHAAs based on the number of qualifying patients who reside within each CHAA and issue one of the available dispensary registration certificates in each of the highest ranked CHAAs. For example, if 30 dispensary registration certificates are available to be allocated during this step, the Department will publicly identify the 30 CHAAs with the highest number of qualifying patients who reside within the CHAA. The Department will then allocate one dispensary registration certificate within each identified CHAA according to R9-17-303(B)(2).

  3. If any available dispensary registration certificates are not issued in one of the publicly identified counties or CHAAs under the first two steps, the Department will prioritize and allocate the remaining available certificate(s) according to R9-17-303(B)(3). This third step should not become necessary unless no qualified application is received for a county or CHAA identified under the first two steps.

    If there is more than one applicant for an identified county or CHAA, each application that is substantively complete will be scored based on the number of qualifying patients who reside within 10 miles of the proposed dispensary location and the number of dispensaries operating within 10 miles of the proposed dispensary location. For example, if the proposed dispensary location is within 10 miles of one operating dispensary, the number of qualifying patients who reside within 10 miles of the proposed dispensary location will be divided by 2. If the proposed dispensary location is within 10 miles of two operating dispensaries, the number of qualifying patients who reside within 10 miles of the proposed dispensary location will be divided by 3.

    If there is a tie between two or more applicants or a margin of 0.1% or less in applicant scores generated by applying the criteria in R9-17-303(B), the Department may randomly select one of such applicants for allocation of the subject dispensary registration certificate.

    Per R9-17-303(C), “10 miles” includes the area contained within a circle that extends for 10 miles in all directions from a specific location.

    Per A.R.S. § 36-2810(A), qualifying patient, operating dispensary and proposed dispensary addresses will not be disclosed before or after the Summer 2016 allocation.

By |2017-02-11T17:05:20-07:00June 1st, 2016|Dept Health Services, DHS Rules|Comments Off on Application Period for New Arizona Medical Marijuana Dispensaries Begins July 18, 2016