THE BLOG
09/09/2014 04:29 pm ET Updated Nov 09, 2014

Congressman Blumenauer Addresses IRS vs. Legal Marijuana This Saturday

Congressman Earl Blumenauer (D-OR) is well-known in Washington DC for his bow ties and dedication to bicycling. Yet this quintessentially liberal environmentalist from Portland teamed up last year with the conservative head of Americans for Tax Reform, Grover Norquist, to call for sweeping changes to US tax laws.

The subject that brought this odd couple together is the application of a section of IRS tax code known as 280-E. This statute, ushered in during the days of the wild 1980's cocaine trade made famous in the hit show "Miami Vice", forbids alleged drug kingpins from deducting their customary costs of doing business on their taxes.

But a law intended to deprive coke lords of the spoils of their illegal narcotics trade is now used by US attorneys to go after the marijuana businesses made legal under state law in many US states -- both the recently-legalized recreational marijuana businesses in Colorado and Washington and the medical marijuana businesses which in some states have operated for over a dozen years.

Rep. Blumenauer is still pushing for the reform and will be among many international delegates speaking at this weekend's International Cannabis Business Conference (ICBC) in Portland, Oregon's convention center. The congressman has sponsored legislation, called "The Small Business Tax Equity Act," which would create "an exception to Internal Revenue Code Section 280E that allows businesses operating in compliance with state laws to take business-related deductions associated with the sale of marijuana just like any other legal business."

The reluctance of banks to offer services to state-legal marijuana businesses is also of concern. Many businesses operate as cash-only, increasing the risk of robberies and shady accounting. In Colorado, businesses must take their tax payments to the one IRS office in Denver that will accept cash, which then penalizes them for not using the electronic tax payment systems that the businesses need a forbidden bank account to use. If making the regular payroll period trip to Denver is too onerous, the IRS will allow the businesses to make one lump sum cash payment quarterly, but will also add a 10% late payment penalty.

Rep. Blumenauer's hour-long presentation on Saturday morning promises to "provide the latest information regarding the important work being done in Congress to ensure that state-regulated cannabis businesses can operate the same as any other business," and follows what is sure to be an insightful keynote speech from conservative commentator and Daily Dish blogger Andrew Sullivan.

The congressman may also be addressing his recent call for federal officials to investigate allegations of illegal use of federal grant money to influence Oregon's forthcoming marijuana legalization vote. In his letter to heads of the ONDCP and SAMHSA, Rep. Blumenauer complains of a so-called marijuana educational summit and tour planned for the week prior to Oregonians receiving their mail-in ballots. "The bias of the speakers selected, the overall one-sided focus of the events, and the proximity between these events and the upcoming election are cause for concern," writes Rep. Blumenauer.

In response to the inquiry by the Congressman's office, Josh Marquis, the Clatsop County District Attorney acting as a spokesperson for the anti-legalization forces, accused Rep. Blumenauer of "political thuggery" and legalization proponents of "bullying" the funding sources for the summit and tour into withdrawing their support so the public won't hear about the health risks of marijuana. Rep. Blumenauer's office was quick to note that he and Marquis will be debating the legalization initiative face-to-face at the Salem City Club in the state capital this Friday preceding the congressman's presentation on Saturday at the ICBC.