Coporate Americas High Life
Stacking the vapors... ILLA
Forbs.com
It’s hard to ignore the prevalence of medical marijuana dispensaries in California and elsewhere. They are on the corner and in the news. If you are a tax lawyer, it is even harder to ignore them, for there are big tax problems in this industry. See Voters Say Yes To Marijuana, IRS Says No. But when I said I thought the industry was going corporate—Is Medical Marijuana Going Corporate?—I didn’t realize how true it was.
Now I’m getting merger notices. Yes, marijuana M&A is here. In this case, it’s about the vapor machines that can obviate smoking and instead dispense the meds without even using a match (or a lighter for that matter).
Medbox, Inc. (OTC Markets: MDBX) announced the acquisition of 100% of Vaporfection International Inc., manufacturer of Vaporfection vaporizers. Medbox was featured on the cover of the Los Angeles Times Business Section: Wall Street sees opportunity in marijuana.
Vaporfection makes “herbal delivery systems.” The deal involved the issuance of 260,864 MDBX stock warrants. Medbox sells and services automated, biometrically controlled dispensing and storage systems for medicine and merchandise. And Vaporfection seems quite a catch.
Vaporfection claimed Best Vaporizer in Product of the Year at the Cannabis Cup Amsterdam 2011, and Best Vaporizer at the Kush Expo LA 2012. The company’s patented designs cause marijuana to release its medicinal ingredient into the vapor. The resulting vapor is pure, virtually odorless, and goes into the patient’s respiratory system.
Vaporfection was created by Amir Yomtov in 2006. In 2011, the company was purchased by entrepreneur Herb Postma. Mr. Postma continues to manage Vaporfection and notes that under Medbox, Vaporfection revenues are projected to exceed $4 million in 12 months. All this sound rosy, but not to the feds.
After all, legal dispensaries are still labeled as drug traffickers under federal law, and that creates big tax problems. Section 280E of the tax code denies tax deductions for any business trafficking in controlled substances. The IRS says it must enforce Section 280E. Yet the U.S. Tax Court has opened the door a crack by allowing dispensaries to deduct other expenses distinct from dispensing marijuana. See Californians Helping to Alleviate Medical Problems Inc. v. Commissioner.
If a dispensary sells marijuana and operates the separate business of care-giving, the care-giving expenses are deductible. Some expenses might relate to both. If only 10% of the premises are used to dispense marijuana, 90% of the rent is deductible. But good record-keeping is essential. See Medical Marijuana Dispensaries Persist Despite Tax Obstacles.
But even good records won’t make vaporizers or drug paraphernalia deductible. In Olive v. Commissioner, Martin Olive sold medical marijuana at the Vapor Room, where he used vaporizers so patients didn’t have to smoke. However, with only one business, Section 280E precluded Olive’s deductions.
Robert W. Wood practices law with Wood LLP, in San Francisco. The author of more than 30 books, including Taxation of Damage Awards & Settlement Payments (4th Ed. 2009 with 2012 Supplement, Tax Institute), he can be reached at Wood@WoodLLP.com. This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.
Melinda HAag we go again…
Oakland sues U.S. to stop medical marijuana property seizures
L.A. NowThe city of Oakland filed suit Wednesday against top federal prosecutors in an attempt to stop them from seizing property leased by the nation’s largest medical marijuana dispensary.
The unprecedented civil complaint, filed in federal court against Atty. Gen. Eric Holder and Melinda Haag, U.S. attorney for the Northern District of California, seeks to “restrain and declare unlawful” a July federal forfeiture action against Harborside Health Center’s landlords in Oakland and San Jose.
The suit comes as federal prosecutors have ramped up efforts to shutter dispensaries statewide, targeting those close to schools as well as operations such as Harborside, which are in compliance with local and state laws but that prosecutors have deemed "superstores."
Launched in 2006, Harborside now counts 108,000 patients in its collective and paid $3.5 million in taxes last year, $1.1 million of that to Oakland. Co-founder Steve DeAngelo worked closely with Oakland officials as they crafted one of the nation's strictest regulatory schemes to monitor and tax the industry.
The lawsuit refers to Harborside as "vital to the safe and affordable distribution of medical cannabis to patients" suffering from pain, illness and injury.
San Francisco attorney Cedric Chao, who is representing Oakland, said in a statement Wednesday that the federal government "acted beyond its authority" by filing the forfeiture action outside the statute of limitations. He added that the government has indicated for many years "by its words and actions that so long as dispensaries and medical patients acted consistently with state law, the dispensaries would be allowed to operate. Oakland has reasonably relied on these assurances."
In an interview, Oakland City Atty. Barbara J. Parker said the lawsuit "is about protecting the rights of legitimate patients who need this medicine” and “doing everything we can to assure that this pipeline is not shut off."
If federal prosecutors succeed in shuttering Harborside, she said, “public safety could be worsened because those patients would be out in the black market purchasing this medicine from criminals.”
A representative for the U.S. attorney’s office did not return a late afternoon call for comment Wednesday.
Advocates for medical marijuana said they know of no other instance in which a city has sued federal prosecutors in an attempt to protect a dispensary.
"I would definitely welcome them to the fight," said Don Duncan, California director for Americans for Safe Access. “The symbolism of this is very important.”
Harborside's Oakland dispensary is the largest in the nation, and the center also operates a smaller sister dispensary in San Jose. Landlords facing the forfeiture action have moved in state court to evict, while Harborside has countered that it is meeting all lease requirements. Court rulings are expected soon.
Meanwhile, a federal court hearing is scheduled for Nov. 1 on a motion by the San Jose property owner "to enjoin us from selling cannabis," Harborside's DeAngelo said. He called Oakland’s lawsuit "the first time that any official governmental body has formally challenged the federal government’s attacks on medical cannabis laws."
"I think the city realizes that Melinda Haag is not only attacking Harborside but attacking the entire system of regulated medical cannabis sales that the city painstakingly developed," he said.
Obama // Romney // Legalization?
Ads running to legalize marijuana in three states
RBR.com
By Carl Marcucci
In November, voters in Colorado, Washington and Oregon will consider legalizing marijuana for recreational use. Although similar initiatives have failed in the past, this time the groups fighting to legalize pot are well-organized, professional and backed by high-dollar donors willing to outspend the competition, reports Raycom News Network.
In Colorado, the Campaign to Regulate Marijuana Like Alcohol (CRMLA) has produced several ads that say marijuana is healthier than alcohol. The campaign’s website points to medical studies that claim marijuana, unlike alcohol, has not been linked to cancer, brain damage, addiction or high healthcare costs.
CRMLA was given nearly $1.2 million from the Marijuana Policy Project, a DC-based lobbying group, as well as more than $800,000 by Peter Lewis, the founder and chairman of Progressive Insurance. Lewis has been a vocal proponent of marijuana legalization for several years and donated millions to legalization efforts around the country.
In an online video ad campaign, CRMLA has young adults explaining to their parents they prefer marijuana to alcohol. In one of the ads, titled Dear Mom, a 20-something woman tells her mother marijuana is “better for my body, I don’t get hung-over and honestly I feel safer around marijuana users.”
In Washington, rather than comparing marijuana to alcohol, New Approach Washington (NAW) is focusing on legalization, arguing outlawing cannabis does more harm than good, by wasting tax dollars on law enforcement while letting gangs control the money. She describes the possible benefits of legalization through saved law enforcement dollars and extra tax revenue.
The TV spot has a professional/executive looking woman, “I don’t like it personally, but it’s time for a conversation about legalizing marijuana. It’s a multi-million dollar industry in Washington state, and we get no benefit.”
These efforts appear to be working. In Washington, 50% of voters say marijuana should be legal while 38% say it should not, according to an Elway Research poll. And in Colorado, a Denver Post poll showed 51% of Coloradans were in favor of legalization, while 41% opposed it.
In Washington, the effort to legalize marijuana is being fought with a bankroll of between $4 and $5 million, according to the Raycom News Network story. NAW used those funds to put $1 million into television advertising during August, and hope to put triple that amount into the weeks preceding the November vote.
In total, groups in Colorado fighting to get marijuana legalized have a war chest of $2.5 million.
The campaigns are especially targeting women ages 30 to 55, whom tend to be less supportive of legalization and regulation than men.
The only visible group opposing the marijuana ballot, SMART Colorado, has been given less than $200,000 – most of it from Save Our Society, a Florida-based anti-drug group.
RBR-TVBR observation: Interesting that the Chairman of Progressive Insurance is donating so much money in this legalization effort. Perhaps legalizing it would create fewer accidents/injuries from police chases and save the insurance industry money? We doubt drivers with the stuff in their car would try to flee if it’s no more illegal than a pack of cigarettes. Who knows, but Progressive is a big corporation and Lewis seems to not be concerned about sticking his neck out on this.
Ganjanomics
Medical Marijuana Laws Go Up in Smoke
By CAMERON LANGFORD courthousenews.com
Sixteen years after California voters passed Proposition 215, legalizing medical use of marijuana, it's clear the plant is not going to disappear.
Now if only the federal government could figure that out.
The message will be exhaled across the West Friday, as pot smokers gather to celebrate their national holiday: 4/20, a number whose origins are veiled in time and rumor, if not in smoke.
President Obama does not hear the message.
At a Summit of the Americas conference in Columbia on April 14, the host nation's President Juan Manuel Santos discussed alternatives to the "War on Drugs," and urged consideration of a middle ground short of decriminalization.
In response, Obama said, "I think it is entirely legitimate to have a conversation about whether the laws in place are ones that are doing more harm than good in certain places." But, he added, "I personally, and my administration's position is that legalization is not the answer,'" according to The New York Times.
Consider some numbers the War on Drugs has generated:
The annual marijuana crop in California is worth $13.8 billion, according to "Ganjanomics," an Aug. 15 story in High Country News.
Mexico's war with drug cartels, backed by $1.6 billion in U.S. money for training, support and equipment, has brought that country 50,000 deaths in 5 years.
If marijuana were legal in the United States, you could grow it in your back yard, bring it to your local farmers' market to trade or sell, and buy it commercial grade at your corner store or at specialty shops.
Law enforcement could use a device, akin to a breathalyzer, to determine if someone was too high to be driving.
Drug cartels would have less incentive to battle over supply routes marijuana would no longer be expensive.
Unfortunately for California, the Obama administration is making the state it the poster child for what flouting federal drug laws will get you.
Under the Controlled Substances Act marijuana is classified as a Schedule I drug, meaning: "a) The drug or other substance has a high potential for abuse, b) The drug or substance has no currently accepted medical use in the United States."
But in the rural Northern California counties of the Emerald Triangle, including Mendocino, Trinity and Humboldt Counties, marijuana is what powers their economies.
Tired of dealing with hunters and hikers encountering gun-toting pot growers in its forests, Mendocino County started a first-of-its kind permitting program in 2010 that let medical marijuana collectives grow up to 99 plants, to bring pot growers out of the black market.
Participants paid the county $1,500 in application fees, $50 for zip ties for each plant and $300 to $600 per month for monthly garden inspections by sheriff's deputies.
Nearly 100 farmers signed up for the program, which generated $663,230 for the Mendocino County Sheriff's Office from July through December, according to county officials.
That all changed in October, when DEA agents raided Northstone Organics' owner Matthew Cohen's Mendocino County farm and cut down his 99 marijuana plants.
Cohen ran a medical marijuana delivery service for patients in the Bay Area and Los Angeles, and appeared on the PBS documentary show "Frontline" earlier in the season, touting his garden's compliance with county law.
Due to threats from U.S. Attorney Melinda Haag that Mendocino County could face litigation if the program continued, the board of supervisors voted in February to end it.
Mendocino County Sheriff Tom Allman was an advocate of the program.
"This step that the U.S. Attorney's Office took in California, in my humble opinion as an elected sheriff, was a step backwards," Allman told KQED News. "We're further away from a solution today than we were two months ago."
On April 3 federal agents raided Oaksterdam University, a medical marijuana training college in Oakland, founded by Richard Lee, who spent more than $1 million backing a defeated 2010 California ballot measure that would have legalized recreational marijuana use.
An IRS spokeswoman told reporters that agents were serving a federal search warrant but said she could not comment on the raid's purpose.
Given the federal government's position, and the U.S. Supreme Court 2005 ruling in Gonzalez v. Raich, that Congress can criminalize homegrown cannabis production and use even where states approve it for medical purposes, this is a battle that will play out over decades.
What will it take for our nation's leaders to even start discussing solutions to a problem that will only keep growing?
Can’t stop the cannabiz
Marijuana test lab sues Santa Monica to force city to issue a business license
therepublic.com
SANTA MONICA, Calif. — The owner of a marijuana test lab has sued Santa Monica because the city refuses to issue a business license.
Richard McDonald's Golden State Collective tests medical marijuana for THC levels as well as mold, bacteria and pesticide content. Growers and dispensaries use his service to make sure their pot is safe and have the necessary potency.
It isn't a dispensary and doesn't sell pot.
The Santa Monica Daily News says McDonald has been refused a business license because the laboratory isn't an approved use in the city.
McDonald says City Hall has been dragging its feet so he opened his lab this month without one.
McDonald says City Hall has been dragging its feet so he opened his lab this month without one.
McDonald's lawyer Roger Diamond filed suit on March 19, claiming the lab's activities are within the limits of California law.
California legalized medical marijuana in 1996.
Growing together, growing strong
California marijuana workers ready to unionize
foxnews.com
It's going to be harder for politicians to take pot shots at pot shops, as Los Angeles marijuana sellers link up this week with a powerful union.
The United Food and Commercial Workers union is welcoming medical marijuana dispensers into its ranks, at a time when the city government is moving to crack down on the shops.
MyFoxLA.com reports that the move could help legitimize the industry as the city considers whether to impose a ban on local marijuana dispensaries.
The UFCW, which represents grocery and health care workers among others, is a powerful force whose donations and endorsements are a valuable commodity for public office-seekers.
According to MyFoxLA.com, medical marijuana workers have also started to unionize elsewhere, joining up with the UFCW in Oakland, Calif., as well as in Colorado.
The Teamsters welcomed California marijuana growers into their union back in 2010.
Dirty judgement
Medical Marijuana Lawsuit Dismissed By Federal Judge In Sacramento
huffingtonpost.com
SAN FRANCISCO -- Medical marijuana advocates faced another setback Tuesday, when a federal judge in Sacramento dismissed a lawsuit claiming that the Obama administration broke its promise to leave the pot industry alone when it began an aggressive crackdown against California dispensaries last fall.
Proponents of the suit cited President Obama's 2009 Ogden Memo, which told federal prosecutors to concentrate their efforts on large drug trafficking networks and "not focus federal resources" on medical marijuana operations in states that have legalized cannabis for medicinal purposes.
But in a sharp reversal of the memo, federal authorities announced a renewed effort to target pot dispensaries throughout California last October, claiming the industry had ballooned to unprecedented proportions.
In the four months since the reinstated crackdown, a number of medical cannabis clubs across the state have been forced to shut down, including five in San Francisco and the legendary Marin Alliance for Medical Marijuana in Marin County, California's oldest. The District Attorney's office has begun investigating 12 more stores in San Francisco this year.
The U.S. attorneys going after such dispensaries have justified their actions mainly by claiming the shops operate too close to parks and schools.
Pot activists have fought back, arguing the federal government should focus its energy elsewhere and not interfere with states abiding by their own laws.
"It's a total waste of resources," Stephanie Tucker, spokeswoman for the San Francisco Medical Cannabis Task Force, told The Huffington Post. "They're attacking a peaceful, regulated community and it's wasting money. Shame on them."
The Sacramento lawsuit was one of a handful filed in November by cannabis suppliers and patients, who cited the Ogden Memo as the basis for their action. U.S. District Judge Garland Burrell, who reviewed the case in the capitol, justified his dismissal by claiming the memo was not a "binding commitment," simply a statement of priorities.
Burrell's ruling will allow for prosecutors to continue to take action against dispensaries operating throughout the state.
Matthew Kumin, a lawyer representing one of the dispensaries in the Sacramento case, told SF Weekly that the dismissal of the cases without allowing a fair trial is bogus. "The government's blocking of us is irrational at this point," Kumin said to SF Weekly. "It's clear there's medical use; circumstances have changed."
Kumin pointed to federally-backed clinical trials of cannabis-based drugs such as Sativex as proof that scientists believe marijuana has a medical benefit. Despite that, he said he expects similar lawsuits in Oakland and Los Angeles to be dismissed this week.
"The judges know we're in the right," he said. "They just don't want to admit it."
SAN FRANCISCO -- Medical marijuana advocates faced another setback Tuesday, when a federal judge in Sacramento dismissed a lawsuit claiming that the Obama administration broke its promise to leave the pot industry alone when it began an aggressive crackdown against California dispensaries last fall.
Proponents of the suit cited President Obama's 2009 Ogden Memo, which told federal prosecutors to concentrate their efforts on large drug trafficking networks and "not focus federal resources" on medical marijuana operations in states that have legalized cannabis for medicinal purposes.
But in a sharp reversal of the memo, federal authorities announced a renewed effort to target pot dispensaries throughout California last October, claiming the industry had ballooned to unprecedented proportions.
In the four months since the reinstated crackdown, a number of medical cannabis clubs across the state have been forced to shut down, including five in San Francisco and the legendary Marin Alliance for Medical Marijuana in Marin County, California's oldest. The District Attorney's office has begun investigating 12 more stores in San Francisco this year.
The U.S. attorneys going after such dispensaries have justified their actions mainly by claiming the shops operate too close to parks and schools.
Pot activists have fought back, arguing the federal government should focus its energy elsewhere and not interfere with states abiding by their own laws.
"It's a total waste of resources," Stephanie Tucker, spokeswoman for the San Francisco Medical Cannabis Task Force, told The Huffington Post. "They're attacking a peaceful, regulated community and it's wasting money. Shame on them."
The Sacramento lawsuit was one of a handful filed in November by cannabis suppliers and patients, who cited the Ogden Memo as the basis for their action. U.S. District Judge Garland Burrell, who reviewed the case in the capitol, justified his dismissal by claiming the memo was not a "binding commitment," simply a statement of priorities.
Burrell's ruling will allow for prosecutors to continue to take action against dispensaries operating throughout the state.
Matthew Kumin, a lawyer representing one of the dispensaries in the Sacramento case, told SF Weekly that the dismissal of the cases without allowing a fair trial is bogus. "The government's blocking of us is irrational at this point," Kumin said to SF Weekly. "It's clear there's medical use; circumstances have changed."
Kumin pointed to federally-backed clinical trials of cannabis-based drugs such as Sativex as proof that scientists believe marijuana has a medical benefit. Despite that, he said he expects similar lawsuits in Oakland and Los Angeles to be dismissed this week.
"The judges know we're in the right," he said. "They just don't want to admit it."
The Magazine
Advertisement
Like Us!
Advertisements
Leaflets
Recent Posts
- California medical vote
- Ignorance
- Congressman preach!
- When derbs stop working….
- Issue #29 Now Available
- D.C. – Up in smoke; June 1 first dispensary set to open!
- Colorado green lights
- Department of (In)justice
Follow Us
Tweetin @ ReLeafMagazine
Advertisement
ReLeaf Newsletter Subscription
Advertisements
Copyright © 2013