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Dispensaries hit with IRS audits, mayors condemn federal intervention, more

CannaBiz

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Internal investigation

Messages have been floating around social media regarding an influx of audits the Internal Revenue Service is apparently aiming at Colorado medical-marijuana centers, which are unable to deduct business expenses from their federal taxes. One posted by Denver advocate Michelle LaMay reads, "One of my MMC customers yesterday said they are being audited by the IRS. She thinks the IRS waited until now so they can go back 3 years. She was one of the first to be licensed so has that much history for them to peruse."

And while it's unclear how widespread it is, or if they're part of the federal government's push-back against cannabis, an audit notice is a hell of a thing, says Bill Fodge, owner of WTJ MMJ Supply.

"About a month ago — just before I went on vacation, of course — I got a little notice in the mail saying that I'd been picked for a random IRS audit covering 2010 through 2012," says Fodge, sitting on a couch in front of piles of paperwork spread over the floor and table at his North Academy Boulevard dispensary. "Now, no way is this random. I don't believe it."

Pulling out a clipped stack of paper an inch thick and bearing the logo of Colorado Springs State Bank, Fodge says, "I had to go back and pay them to pull up all my [closed] accounts," estimating that he's spent more than $400 on copies. "And [the teller] said to me, 'Oh, you need this stamped here and you need this front page.' I go, 'Wow, you know that?' 'Oh yeah, a lot of you are getting audited.'"

Reached by phone, IRS spokeswoman Karen Connelly would only say, "We enforce federal tax law as it is written, in regards to medical marijuana, and that refers to Revenue Code 280E," which prohibits those business deductions.

According to an April story from CNN Money, 76 percent of audits are conducted by mail. That doesn't limit their impact any, though. "It's taken me away from my business," Fodge says of the work required to meet the request. "I've got a second grow I'm working on; I'm not even working on it right now. ... My business is probably down 15, 18 percent."

Keef crumbs

• Around 4 p.m., Thursday, June 27, Colorado Springs City Council will hear from the public on the matter the public already spoke on: the availability of recreational marijuana. In preparation for a July vote on whether to allow recreational retail, the "town hall" meeting will be held at City Hall (107 N. Nevada Ave.), but we'll also be live-tweeting it. Follow along at @brycecrawford.

• On Monday, the United States Conference of Mayors unanimously passed a resolution "that urges the federal government to refrain from interfering in the implementation of state and local marijuana laws," says a release from the Marijuana Policy Project.

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