6 ms·

Yes, it's still very much illegal federally. It's still a Schedule I controlled substance. The federal banking system / IRS refuses to interact with marijuana b

Yes, it's still very much illegal federally. It's still a Schedule I controlled substance. The federal banking system / IRS refuses to interact with marijuana businesses, the postal service won't mail ads for it, the DEA continues to raid growers, etc, etc. Edit: as others have pointed out, I was incorrect in lumping in the IRS with the rest of the federal banking system. The IRS does indeed accept money from marijuana businesses. There are other parts of the federal banking system that are not so "accepting", for instance: http://www.denverpost.com/2016/01/05/judge-tosses-denver-marijuana-credit-unions-suit-for-federal-approval/ http://www.denverpost.com/2016/01/05/judge-tosses-denver-mar...

tlrobinson 10y ago
> IRS refuses to interact with marijuana businesses What does that mean? Surely the IRS still wants their money? It would seem to put the IRS and marijuana businesses in an awkward position...
- ergothus 10y ago
  Pretty sure the IRS is more than willing to deal with MJ businesses - they have an entire setup to let you report "illegal" gains and even keep that secret long before the recent legalization efforts. Banks, now that's a different story.
blackguardx 10y ago
The IRS explicitly states that you need to declare bribes and income from illegal activities [1] "Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity." [1] https://www.irs.gov/publications/p17/ch12.html https://www.irs.gov/publications/p17/ch12.html
- tmm 10y ago
  Also from stolen goods, unless you return them in the same year: "If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner."
  - icebraining 10y ago
    I wonder if one could deduct it if they return the item in the subsequent year instead :)
    - MikeHolman 10y ago
      You can deduct business expenses for illegal activities, except for specific categories (for example, bribing public officials is not a valid deduction). So you might actually be able to deduct that, if you could justify returning the property as a business expense.
  - swamp40 10y ago
    I would have bet money that was a joke. But no.
  - userbinator 10y ago
    "We don't care where your income comes from, we just want our cut of it."
- semi-extrinsic 10y ago
  That's just hilarious! Are you saying drug dealers actually report their income and pay taxes off it?
  - shimon 10y ago
    Of course not. This is just a clarification about another point of law that a typical drug dealer violates, which gives law enforcement yet another angle. In some cases proving tax evasion is easier than proving other crimes. This is what got Al Capone -- because the crime was perpetrated through his organization and not by him directly, it would have been difficult to hold him directly responsible for the crimes. However, once his ledger was discovered it was straightforward to prove that he received significant income without making the required income tax payments.
  - ktRolster 10y ago
    Once drug dealers get caught, they have to pay back taxes (I saw that in a movie)
  - int_19h 10y ago
    It depends on your definition of "drug dealer". Companies that operate in the open under state laws that legalized weed normally do report their income and pay federal taxes on it, despite the activity being illegal on federal level.
  - mikemackle 10y ago
    For some twilight-zone stuff, check out drug tax stamps (i.e. http://www.ksrevenue.org/perstaxtypesdrug.html http://www.ksrevenue.org/perstaxtypesdrug.html) You have to buy them and place them on your drugs so if you get raided, you can prove that you paid taxes on your supply. There are even folks who collect the stamps.
xxpor 10y ago
The IRS doesn't refuse to interact with anyone. They want their money no matter how you made the income, and if you're in the country legally or not. Remember, what they ultimately got Al Capone on wasn't racketeering, bootlegging or murder, it was tax evasion.
nathanasmith 10y ago
The absurd thing is that while marijuana being a schedule I drug which in the DEA's own words: >> Schedule I drugs are the most dangerous drugs of all the drug schedules with potentially severe psychological or physical dependence.[0] Cocaine and methamphetamine are both schedule II. Now I understand the difference is that Schedule II means there are some medical uses but to lump marijuana in with "the most dangerous" but not meth? That just seems ridiculous. [0]https://www.dea.gov/druginfo/ds.shtml https://www.dea.gov/druginfo/ds.shtml
- milesokeefe 10y ago
  Methamphetamine is routinely prescribed for ADHD under the brand name Desoxyn, it absolutely has medical use.
  - spraak 10y ago
    But it's manifold more dangerous than cannabis
    - yarou 10y ago
      Alcohol and tobacco are several orders of magnitude more dangerous than anything currently scheduled.
      - milesokeefe 10y ago
        Fentanyl is scheduled, so that's really not true.
      - Buge 10y ago
        They kill more people simply because they're more popular. I don't think they're more dangerous per dose.
        ItendToDisagree 10y ago
        Think again!!! http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4311234/ http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4311234/ Alcohol is incredibly bad for your body dose by dose compared to marijuana. Sidenote (not from this study): Mushrooms are supposedly the least harmful to the human body... Who'da thought?
mikestew 10y ago
IRS refuses to interact with marijuana businesses That's not even remotely true, as even 30 years ago the IRS happily took my money, and did so without telling anyone else where the money came from. I mean, maybe it's changed since, but when it comes to "IRS won't take my money", ima gonna have to pull the "citation needed" card.
- chris11 10y ago
  Are you saying that you made money selling drugs, told the IRS that the money was made illegally and nothing happened? I've heard that the IRS definitely focuses on collecting tax money and not how it was made, but I thought that people technically never admitted to anything when declaring illegal income sources. It looks like the applicable part on a 1040 would be line 21, which just asks for "other sources of income".
  - sib 10y ago
    During the course of facilitating a tax audit of a startup I worked at some years ago, I was told by the IRS agent conducting the audit that they in fact have an entire group of agents focused on compliance and audit for prostitutes. It turns out that the IRS' job is to collect money, not to make sure that rules established by other parts of the government are followed ;)
  - kalleboo 10y ago
    > told the IRS that the money was made illegally and nothing happened Is there a checkbox on US tax forms for "illegally earned money"? Or are you expected to put that in a free-text field?
    - mikestew 10y ago
      Man, I didn't know this would get so many responses, and I wished I could remember better from 30 years ago. So I apologize for the lack of detail (and I'm not a tax accountant anyway, so do not be taking this as advice or anything but an anecdote). But as I fuzzily recall, just put it in the "other income" box, deduct cost of goods, sorted. One should also note that (as far as I can tell) the IRS does little more than a cursory glance at most returns to make sure the numbers add up, especially back then. Point being is that it's entirely possible one could have put "income from trafficking under-aged children into white slavery", deducted the cost of acquiring said children, and never gotten flagged because the numbers add up and it doesn't hit the "trying to weasel out of paying what's owed" flag in the computer. Dunno, I'm just relaying an anecdote with a lot of details left out, you sure as hell don't want to take this as tax advice.

tlrobinson 10y ago

> IRS refuses to interact with marijuana businesses What does that mean? Surely the IRS still wants their money? It would seem to put the IRS and marijuana businesses in an awkward position...

ergothus 10y ago
Pretty sure the IRS is more than willing to deal with MJ businesses - they have an entire setup to let you report "illegal" gains and even keep that secret long before the recent legalization efforts. Banks, now that's a different story.

blackguardx 10y ago

The IRS explicitly states that you need to declare bribes and income from illegal activities [1] "Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity." [1] https://www.irs.gov/publications/p17/ch12.html https://www.irs.gov/publications/p17/ch12.html

tmm 10y ago
Also from stolen goods, unless you return them in the same year: "If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner."
- icebraining 10y ago
  I wonder if one could deduct it if they return the item in the subsequent year instead :)
  - MikeHolman 10y ago
    You can deduct business expenses for illegal activities, except for specific categories (for example, bribing public officials is not a valid deduction). So you might actually be able to deduct that, if you could justify returning the property as a business expense.
- swamp40 10y ago
  I would have bet money that was a joke. But no.
- userbinator 10y ago
  "We don't care where your income comes from, we just want our cut of it."
semi-extrinsic 10y ago
That's just hilarious! Are you saying drug dealers actually report their income and pay taxes off it?
- shimon 10y ago
  Of course not. This is just a clarification about another point of law that a typical drug dealer violates, which gives law enforcement yet another angle. In some cases proving tax evasion is easier than proving other crimes. This is what got Al Capone -- because the crime was perpetrated through his organization and not by him directly, it would have been difficult to hold him directly responsible for the crimes. However, once his ledger was discovered it was straightforward to prove that he received significant income without making the required income tax payments.
- ktRolster 10y ago
  Once drug dealers get caught, they have to pay back taxes (I saw that in a movie)
- int_19h 10y ago
  It depends on your definition of "drug dealer". Companies that operate in the open under state laws that legalized weed normally do report their income and pay federal taxes on it, despite the activity being illegal on federal level.
- mikemackle 10y ago
  For some twilight-zone stuff, check out drug tax stamps (i.e. http://www.ksrevenue.org/perstaxtypesdrug.html http://www.ksrevenue.org/perstaxtypesdrug.html) You have to buy them and place them on your drugs so if you get raided, you can prove that you paid taxes on your supply. There are even folks who collect the stamps.

xxpor 10y ago

The IRS doesn't refuse to interact with anyone. They want their money no matter how you made the income, and if you're in the country legally or not. Remember, what they ultimately got Al Capone on wasn't racketeering, bootlegging or murder, it was tax evasion.

nathanasmith 10y ago

The absurd thing is that while marijuana being a schedule I drug which in the DEA's own words: >> Schedule I drugs are the most dangerous drugs of all the drug schedules with potentially severe psychological or physical dependence.[0] Cocaine and methamphetamine are both schedule II. Now I understand the difference is that Schedule II means there are some medical uses but to lump marijuana in with "the most dangerous" but not meth? That just seems ridiculous. [0]https://www.dea.gov/druginfo/ds.shtml https://www.dea.gov/druginfo/ds.shtml

milesokeefe 10y ago
Methamphetamine is routinely prescribed for ADHD under the brand name Desoxyn, it absolutely has medical use.
- spraak 10y ago
  But it's manifold more dangerous than cannabis
  - yarou 10y ago
    Alcohol and tobacco are several orders of magnitude more dangerous than anything currently scheduled.
    - milesokeefe 10y ago
      Fentanyl is scheduled, so that's really not true.
    - Buge 10y ago
      They kill more people simply because they're more popular. I don't think they're more dangerous per dose.
      - ItendToDisagree 10y ago
        Think again!!! http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4311234/ http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4311234/ Alcohol is incredibly bad for your body dose by dose compared to marijuana. Sidenote (not from this study): Mushrooms are supposedly the least harmful to the human body... Who'da thought?

mikestew 10y ago

IRS refuses to interact with marijuana businesses That's not even remotely true, as even 30 years ago the IRS happily took my money, and did so without telling anyone else where the money came from. I mean, maybe it's changed since, but when it comes to "IRS won't take my money", ima gonna have to pull the "citation needed" card.

chris11 10y ago
Are you saying that you made money selling drugs, told the IRS that the money was made illegally and nothing happened? I've heard that the IRS definitely focuses on collecting tax money and not how it was made, but I thought that people technically never admitted to anything when declaring illegal income sources. It looks like the applicable part on a 1040 would be line 21, which just asks for "other sources of income".
- sib 10y ago
  During the course of facilitating a tax audit of a startup I worked at some years ago, I was told by the IRS agent conducting the audit that they in fact have an entire group of agents focused on compliance and audit for prostitutes. It turns out that the IRS' job is to collect money, not to make sure that rules established by other parts of the government are followed ;)
- kalleboo 10y ago
  > told the IRS that the money was made illegally and nothing happened Is there a checkbox on US tax forms for "illegally earned money"? Or are you expected to put that in a free-text field?
  - mikestew 10y ago
    Man, I didn't know this would get so many responses, and I wished I could remember better from 30 years ago. So I apologize for the lack of detail (and I'm not a tax accountant anyway, so do not be taking this as advice or anything but an anecdote). But as I fuzzily recall, just put it in the "other income" box, deduct cost of goods, sorted. One should also note that (as far as I can tell) the IRS does little more than a cursory glance at most returns to make sure the numbers add up, especially back then. Point being is that it's entirely possible one could have put "income from trafficking under-aged children into white slavery", deducted the cost of acquiring said children, and never gotten flagged because the numbers add up and it doesn't hit the "trying to weasel out of paying what's owed" flag in the computer. Dunno, I'm just relaying an anecdote with a lot of details left out, you sure as hell don't want to take this as tax advice.