Global Ganja Report

The IRS is believed to have opened audits on at least 12 medical cannabis dispensaries in California under the determination that past deductions are invalid because of a clause in the federal tax code prohibiting any enterprise that traffics in Schedule I or II drugs from making business deductions. The move could bankrupt every dispensary that it targets. The first dispensary to receive a final audit decision from the IRS is the Marin Alliance for Medical Marijuana (MAMM) in Fairfax.

Los Angeles voters approved a new medical marijuana tax March 8 that proponents say could raise millions of dollars for the city—although the measure was opposed by advocates and opponents of medicinal cannabis alike. Measure M, which passed with 59% of the vote, allows Los Angeles to collect $50 in taxes for every thousand dollars collected by medical marijuana clinics. (KABC, LA, March 9)

A vote to be held in Los Angeles Tuesday March 8 threatens to increase the cost of an already expensive treatment for medical marijuana patients in the city. Measure M, one of 10 ballot measures facing LA voters, would increase taxes on medical cannabis by 5%, above the nearly 10% patients already pay in sales tax. Patient advocates have come out in opposition to the measure, asking the city to find other sources of revenue and to remove the tax burden from medicinal users.

Dubbed the "Wal-Mart of Weed," the 10,000-square-foot weGrow store, set to open this weekend at 1537 Fulton Ave. in Sacramento, is the first franchise for a company that calls itself a supply and training destination for legal cannabis cultivators. The enterprise started in Oakland last year as a warehouse store called iGrow. Now the Oakland location is being reorganized as a distribution hub for a network of retail hydroponics outlets. The Sacramento store—billed as "the first honest hydro store"—is to be followed by weGrow stores in Arizona, Colorado, New Jersey and Oregon in coming months.

Oakland's Harborside Health Center, the self-proclaimed world's largest cannabis dispensary—handling an annual $22 million in transactions—is being audited by the US Internal Revenue Service. Since late last year, the IRS has been auditing 2008 and 2009 federal tax returns for the Oakland location, one of two outlets Harborside operates for 70,000 medical cannabis users. The other facility is in San Jose.

Oakland City Attorney John Russo has withdrawn his legal counsel from plans to tax and license large-scale cannabis farms, and told the City Council to hire their own attorney.

The city's original cannabis cultivation ordinance set no limits on the size of the cultivation facilities, which would operate as stand-alone businesses separate from dispensaries. The council had hoped to start licensing the farms as early as last month, but suspended action on the licenses in December so the ordinance could be revised to more closely comply with state law.

State Sen. Mark Leno (D-San Francisco) introduced legislation Jan. 27 that would prevent California employers from discriminating against medical marijuana patients. Senate Bill 129 would not change current law, which prohibits employees from using medical marijuana at the workplace. According to Leno, his bill "simply establishes a medical cannabis patient's right to work." SB 129 would reverse a 2008 California Supreme Court ruling that granted employers the right to fire or refuse to hire workers with a physician's recommendation for medical marijuana. Advocates have estimated that more than 400,000 medical marijuana patients live in California.

The California Supreme Court on Jan. 3 allowed police to search arrestees' cell phones without a warrant, saying defendants lose their privacy rights for any items they're carrying when taken into custody. Under US Supreme Court precedents, "this loss of privacy allows police not only to seize anything of importance they find on the arrestee's body...but also to open and examine what they find," the state court found in a 5-2 ruling.