But can a legal dispensary operate like a “legitimate” business? Amazingly, they can’t and are still labeled as drug traffickers. Massachusetts eliminated state criminal and civil penalties for the medical use of marijuana by patients with cancer, glaucoma, HIV-positive status or AIDS, hepatitis C, Crohn’s disease, Parkinson’s disease, ALS, or multiple sclerosis. See Medical marijuana law passes in Massachusetts.
But no matter how “legal” the states make it the IRS is federal and that means trouble. American businesses pay tax on their net not their grossincome and business expenses are as American as apple pie. But Section 280E of the tax code denies deductions for any business trafficking in controlled substances. This black letter rule to stop drug dealer tax deductions also covers medical marijuana since federal law still classifies it as a controlled substance.