Tenth Circuit Upholds IRS Summons in Marijuana Dispensary Dispute

Colorado must hand over records tied to a medical marijuana dispensary as part of the IRS’s audit into potentially improper business deductions, the Tenth Circuit said.

The agency is scrutinizing whether Standing Akimbo LLC, based in Denver, tried to take advantage of tax breaks barred in the tax code. Tax code Section 280E says that a business that consists of trafficking in a Schedule I or II controlled substance can’t receive any tax deductions. State-legal marijuana businesses fall under that federal restriction.

Standing Akimbo declined to provide audit information to the IRS for fear of criminal prosecution. The ...