IRS tracking state databases in effort to block cannabis tax deductions
The Internal Revenue Service is sifting through a Colorado state database that was designed to prevent drug trafficking as a means to block legitimate cannabis companies from claiming federal tax deductions, some businesses are claiming.
The Denver Post reports that the state’s Marijuana Enforcement Division’s METRC tracking system, which monitors the growth and movement of pot, is being tracked by the IRS and companies who have been pinged in the METRC system are now being blocked by the IRS.
While the tax code does prevent businesses that traffic in illegal drugs from claiming deductions, lawsuits from some of the businesses that say they have been impacted by this say that the IRS is overreaching on its authority and conducting criminal investigations that have nothing to do with taxes.
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