The Associated Press reports Riverside Pot Clinic in Oakland is being stuck with a 2.4 million dollar tax bill.
"Government auditors did not dispute, however, that Harborside had properly deducted its biggest expense — the millions of dollars it spent buying pot to sell to people who use it under California's medical marijuana law."
The IRS agrees that the cost of purchasing marijuana for resale is a legitimate business expense. But then, things get weird.
"DeAngelo, the subject of an upcoming Discovery Channel reality show, said the write-offs disallowed by the IRS included standard operating costs such as rent, payroll, employee health insurance and licensing fees."
So, the costs associated with selling the marijuana are not deductible expenses. But the marijuana itself is a legitimate expense.
The moral of the story? Pay your rent, payroll, employee health insurance, and licensing fees in weed.
