Oakland's Harborside Health Center, the self-proclaimed world's largest cannabis dispensary—handling an annual $22 million in transactions—is being audited by the US Internal Revenue Service. Since late last year, the IRS has been auditing 2008 and 2009 federal tax returns for the Oakland location, one of two outlets Harborside operates for 70,000 medical cannabis users. The other facility is in San Jose.
The outcome may establish whether US tax authorities treat medical cannabis as a legitimate enterprise or illicit drug trafficking. IRS tax code passed during the Reagan administration to keep drug dealers from making business deductions could cost Harborside millions of dollars in deductions for salaries and overhead.
Harborside director Steve DeAngelo said Harborside is lobbying Congress to change the code for dispensaries in states where medical cannabis is legal. "We're...objecting to the fact that something designed for cocaine kingpins is being applied to licensed medical cannabis facilities following state law," DeAngelo said. (Sacramento Bee, Feb. 18)