US Supreme Court denies petition for 280E Marijuana Tax Case


A petition was filed by a Colorado medical cannabis dispensary, Alpenglow Botanicals, challenging the authority of the Internal Revenue Service to tax and investigate the authenticity and legality of a marijuana business.

Marijuana Business Daily, a daily news source which produces content on the global state of the cannabis industry, reported that the United States Supreme Court concluded that “The petition for a writ of certiorari should be denied.”

Alpenglow Botanicals deduced and reasoned to the Supreme Court that “Section 280E of the federal tax code doesn’t empower the IRS to investigate and rule that a marijuana business has violated federal criminal drug laws.”

The questions presented to the United States Supreme Court were as follows:

The Internal Revenue Code prohibits allowing any
tax deduction or credit for business expenditures incurred in carrying on a trade or business that “consists
of trafficking in controlled substances” in violation of
federal law. 26 U.S.C. 280E. The questions presented
are as follows:

  1. Whether the Internal Revenue Service is authorized, for purposes of applying Section 280E, to investigate and determine whether a business is claiming a deduction for expenses incurred in illegal trafficking in a
    controlled substance.
  2. Whether petitioner’s inability to take a tax deduction as a result of the application of Section 280E constitutes an excessive fine in violation of the Eighth

The court of appeals held that the IRS is authorized to implement and enforce Section 280E.

The following is a “Background excerpt” from the original motion filed by Alpenglow Botanicals. This is written by the Court of Appeals:

“This case, while couched in tax law, is ground zero
of the largest federalism dispute this country has seen
since the Civil War. The federal government claims
that marijuana is a Schedule I controlled substance,
the possession or distribution of which is generally a
serious federal crime. Thirty-three States and the District of Columbia have fervently disagreed with the
federal government and have legalized marijuana on
various levels. Many individuals have moved forward
either possessing or distributing marijuana in accordance with State law. Undaunted, the federal government seeks to hold its power and destroy what the
States claim they can do under the Tenth Amendment
– the Tax Code being the primary weapon of choice.
Section 280E of the Tax Code is the weapon.”

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