In a decision that advocates warn could cripple the industry, the Internal Revenue Service (IRS) has ruled that Oakland's Harborside Health Center cannot deduct standard business expenses on its taxes and sent the dispensary a whopping $2.5 million tax bill.





Harborside

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Harborside

Harborside's

Harborside

Harborside

Zamarra

Harborside

Most businesses are able to deduct standard business expenses, such as rent and payroll, from their federal tax bill, butchief financial officer Luigitold the Bay Citizen the IRS had determined the dispensary cannot deduct standard business expenses because it is involved in "the trafficking of controlled substances."is the largest medical marijuana dispensary in the country, with more than 83,000 members, and pulled in $22 million in sales last year. It has already paid the IRS $500,000 in taxes for 2007 and 2008, the years for which the agency now claims it owes the additional $2.5 million.Although the IRS is happy to takemoney, the federal government considers marijuana nothing more than a Schedule I controlled substance. The IRS attack onis part of an Obama administration assault on medical marijuana distribution using the regulatory apparatus of a number of federal agencies, ranging from the Treasury to the DEA.said it would appeal the ruling and warned that if it stood, the entire medical marijuana dispensary industry could be endangered."We can't live with the conclusions that the IRS has come to and neither can the industry,"said. "If the IRS ultimately prevails, we would close our doors and go away because the business model wouldn't work,” he said.Ironically, on the same day it announced the adverse IRS ruling,also announced it had paid the last installment of its $1,081,450 tax bill to the city of Oakland, which collects a 5% tax on dispensaries.