Pubdate: Wed, 27 Apr 2011 Source: Denver Post (CO) Copyright: 2011 The Denver Post Corp Contact: http://www.denverpost.com/ Details: http://www.mapinc.org/media/122 CLEAR THE AIR ON U.S. POT POLICY The federal government is sending mixed messages about state-sanctioned medical marijuana with its IRS audits. The Internal Revenue Service's audits of medical marijuana businesses in Colorado and elsewhere around the country seem to be within the agency's legal authority, but prompt a larger question for the Obama administration. What is the federal government's over-arching policy on state-approved medical marijuana activity? The Justice Department issued a directive in 2009 saying federal drug enforcement resources wouldn't be used to prosecute medical marijuana interests clearly acting within the frameworks established by states. That directive, partly, caused the industry to boom in Colorado. Yet the IRS reportedly has begun auditing dozens of medical marijuana businesses, pursuing a clause in the federal tax code prohibiting businesses trafficking in Schedule I or II drugs from taking business tax deductions. We've had our issues with the medical marijuana industry, but those involved deserve a consistent answer as to how the federal government views them. The medical marijuana business is a risky one, since marijuana use and distribution remain illegal at the federal level. There is always the possibility the Justice Department could change its views - and with the recent letter from Colorado's U.S. Attorney John Walsh, it appears they are at least refining their views of what's acceptable - or that a new president would backtrack on the directive Attorney General Eric Holder issued. It advised U.S. attorneys that the Justice Department should not go after people with cancer using medical marijuana as part of a recommended treatment regimen that complies with state law. "As a general matter, pursuit of these priorities should not focus federal resources in your States on individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana," it said. However, Justice would continue to prosecute "significant traffickers" of illegal drugs, including marijuana. Commercial enterprises that unlawfully marketed and sold marijuana for profit would remain an enforcement priority. The IRS should issue similar guidance, giving medical marijuana businesses a clear heads-up as to how the agency views their tax obligations. Would medical marijuana businesses be better off not taking business tax deductions? That surely seems to be the case, given the agency's tack in California. A tax attorney told The Denver Post that the IRS has undertaken some 30 dispensary audits there. We have had a fundamental problem with Colorado's medical marijuana "industry" for some time now, especially since voters never signed off on a full-blown dispensary system when they approved a constitutional change allowing for medical pot. However, if the Obama administration is changing its position on how it views dispensaries - especially after the state has created a regulatory framework that allows them to exist - the federal government needs to clearly articulate that position so everyone knows the rules. - --- MAP posted-by: Richard Lake