Is Federal Taxation of Legal Cannabis Illegal?

[Delta4Embassy]

Something that occured watching a CNBC doc about legal cannabis sellers occured when a vendor said how much he was paying in taxes. The interviewer then added "...And federal taxes too right?" And the vendor responded affirmitively. Though hen occured, if cannabis is still a schedule 1 drug, and completely illegal, then how can the federal government tax it? Cannabis sellers are still having difficulty finding banks to put all the money in because of its federal illegality, but that same federal government can accept taxes on it at the same time?

 

[rightwinger]

Good point

How can the federal government tax a business that they consider illegal?

 

[DriftingSand]

The Federal government isn't especially known for its high standards, ethics, or morals. It'll tax whatever it can get its sticky little fingers on.

 

[Delta4Embassy]

Be that as it may, it seems like taxing something the government decides is completely illegal as with cannabis being a schedule 1 drug would be illegal. I'm not proposing shops don't pay federal taxes so much as saying this establishes a cause to repeal the schedule 1 classification, or at the least challenge it in court.

 

[Delta4Embassy]

IRS Files Legal Marijuana Dispensaries Under Drug Trafficking Code

"The Internal Revenue Service uses code 280E to tax illegal, drug-related income. Marijuana has been legalized for medicinal or recreational purposes in 20 states and the District of Columbia, but it is still classified under the federal government’s Controlled Substances Act as a Schedule 1 substance, the most dangerous classification of a drug. West estimates that 280E creates tax obligations for legal marijuana dispensaries that can be 50 percent or more of their revenue.

The IRS has said that the only way to change the law is for Congress to revise either the tax code or the Controlled Substances Act, but the California Supreme Court heard a case in February that could have a far-reaching impact. Sacramento marijuana distributor Canna Care declined what it says was a $100,000 settlement offer from the IRS and instead appealed nearly $875,000 in back taxes, challenging the validity of Code 280E, Time magazine reports. Canna Care is fighting to have employee salaries and benefits and the company’s rental and insurance costs considered tax-deductible expenditures."


Further question arises, if the federal government can tax illegal income be it drug-related or other criminal enterprises, isn't it then in effect aiding and abetting the commision of a crime by treating the proceeds from the criminal offenses as regular taxable income?

 

[Politico]

They're taxing the commerce and income. I say tax the shit out of it.

 

[Delta4Embassy]

Sure, but it's like the ogvernment's conceeding making it illegal doesn't prevent use or demand, so they might as well get a 'piece of the action.' That's hypocritical. If they wanna tax something they should make it legal. Hard to have respect for a hypocrite.

 

[DGS49]

Don't forget ladies (if you ever knew it in the first place), when Al Capone was eventually prosecuted it was for TAX EVASION on his illegal income. Not for murder, robbery, extortion, conspiracy (which wasn't a crime at the time), or anything else. He didn't pay income taxes on his illegal income.