Canna Care, a Christian medical marijuana dispensary, is taking on the IRS to claim back a tax penalty of nearly $1 million. The dispensary and advocacy group was saddled with the penalty under a statute meant to target illegal drug traffickers.
Lanette and Bryan Davies are a husband-and-wife team who run the Canna Care and Crusaders for Patient Rights in Sacramento. The dispensary and community group combines pot with prayer and serves a wide clientele. Now they’re fighting for their right to operate as a normal business without being subjected to crippling federal taxes.
The feds refused to accept the $2.6 million in tax deductions that the nonprofit claimed — and charged it an additional $875,000 in taxes under 280E, a tax code from the Reagan administration that allows the federal government to penalize businesses that sell a controlled substance, even if the substance is legal on the state level.
“The tax law is grossly unfair,” tax attorney Robert Wood told TIME. “Whether you think dispensaries are a good idea or not, if they’re lawful businesses under state law, they should be able to deduct their business expenses like anybody else.”
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Lanette Davies agreed.
“The idea isn’t to have dispensaries not pay taxes,” she told The Huffington Post. “We’re just asking that dispensaries pay a tax that is reasonable.”
The IRS offered to settle the debt for $100,000, but the couple refused the offer, which Lanette Davies called “buying protection money.” Instead, the Davies are taking the IRS to court. The trial began this week at the U.S. Tax Court in San Francisco.
“I feel really confident and really good about the whole experience,” Lanette Davies told the Huffington Post about her hopes for the trial. “Of course I’m hoping for a favorable verdict, but we were able to bring forward some really important facts that need to be heard within our federal courts.”