Tax paperwork — cannabis companies must pay federal and state taxes without taking any of the normal business write-offs.

Jason Dirks

Lawsuit Claims Feds Using IRS as Investigation Arm of DEA, DoJ in Colorado

Lawyers for Silt, Colorado’s Rifle Remedies are claiming in a lawsuit that the Internal Revenue Service is using audits to conduct investigations of legal medical cannabis businesses at the behest of the Department of Justice, the Denver Post reports. The IRS calls the claim illogical and baseless, saying his requests for information from the Marijuana Enforcement Division are in an effort to determine if businesses owe more taxes.

“The IRS is working jointly with the Department of Justice to investigate purported criminal activity of the taxpayers,” lawyers for Rifle Remedies, James Thorburn and Richard Walker wrote in a recent U.S. District Court filing. “To this end, the IRS has converged on Colorado and is conducting mass audits of those it has determined to be unlawfully trafficking in controlled substances … dishing out summonses like candy.”

The attorneys say the IRS is doing the dirty work of both the Justice Department and the Drug Enforcement Agency, who are unable to conduct their own investigation or crackdown due to federal budget amendments which prevent the federal agencies from using federal funds to enforce federal laws in states with legal medical cannabis programs.

In the filing, the IRS says that if federal prosecution was “truly the goal” the DEA could simply send a plainclothes officer to the dispensary to make a purchase because Rifle sells recreational cannabis products.

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