IRS Removes Ability for Cannabis Non-Profits to Receive Tax-Exempt Status

While everyone's freaking out about how Attorney General Jeff Sessions will target legal marijuana businesses, the Internal Revenue Service has already taken steps to punish the cannabis industry without anyone really noticing.

In January the IRS released a giant update in their policies that included a new provision that will hurt cannabis-related organizations. In their new policy, the IRS says they will not accept tax-exempt status from organizations "whose purpose is directed to the improvement of business conditions … relating to an activity involving controlled substances … which is prohibited by federal law regardless of its legality in the state in which such activity is conducted." This means groups that advocate for the cannabis industry will not be eligible for tax-exempt status.

We already know some organizations have been denied. The New Jersey Cannabis Industry Association found out in January that it would not be receiving tax-exempt status, and there's probably more denials on their way.

This could be a major issue for cannabis organizations. If these non-profits are denied tax-exempt status, then they'll have to pay major taxes to the IRS, which would then limit their ability to advocate on behalf of the industry. That means cannabis businesses could lose a major voice.

The IRS already had a tricky relationship with marijuana organizations. Last year, a Treasury Inspector General determined that the IRS had improperly given marijuana non-profits far more scrutiny than necessary in their applications for tax-exempt status. So apparently in order to avoid being punished for that scrutiny, they decided to just deny it outright.

To think a popular, beloved institution like the IRS could do something like this.

(h/t Marijuana Business Daily)


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