TIME Drugs

New Senate Bill Could Solve Medical Marijuana’s Tax Problems

Katy Steinmetz / TIME Bryan and Lanette Davies pose for a portrait at their "Christian-based" medical marijuana dispensary in Sacramento in February 2014.

The bill aimed at healing the sick could save dispensary owners lots of money

When Bryan and Lanette Davies got an $875,000 bill from the Internal Revenue Service, they didn’t pay it. Instead, they took the IRS to court, arguing that a 1982 law meant to prevent drug traffickers from deducting business expenses should not apply to Canna Care, their small “Christian-based” medical marijuana dispensary in Sacramento—or any other medical marijuana dispensary legal under state law.

The couple is in the midst of a years-long legal battle over these expenses, arguing that marijuana dispensaries should be treated like most other small businesses and be allowed to deduct payroll, rent and health benefits from their taxable income.

But a new bill introduced in the Senate could help bring their trial to a conclusion.

On March 10, three Senators introduced a historic bill called the CARERS Act that would end the federal ban on medical marijuana, clearing up the discrepancy between federal law that considers pot an illegal drug and the 23 state laws that sanction the use of medical weed. The bill explicitly does several things: It would reschedule marijuana as a drug with known medical uses to allow for research. It would allow banks to work with dispensaries—both medical and recreational—without fear of being prosecuted for money laundering. And it would create an exception in the Controlled Substances Act that essentially says it doesn’t apply to medical marijuana in states where that substance has been legalized. That last part may help solve legal pot’s tax problem.

An obscure bit of the tax code known as 280E states that businesses in violation of the Controlled Substances Act can’t take a tax deduction or receive any credits for any expenses connected with their trafficking of illegal drugs, which is what medical marijuana dispensaries are currently doing in the eyes of the federal government. (Due to a tax court ruling, the one deduction they can take is for the cost of goods sold). The costs can be crippling, and politicians have joined dispensary owners in saying that prohibiting cocaine dealers from writing off the boats they bought to ship the drug, as one lawyer put it, is not the same as businesses deducting quotidian operating costs while on the right side of the law in their state.

In 2010, a group of Congress members, including Colorado Rep. Jared Polis and former Massachusetts Rep. Barney Frank, sent letters to the IRS asking the agency to interpret the tax code in a way that would allow medical marijuana businesses to be taxed on net income instead of gross income. This is what the IRS told those members of Congress in response:

Because neither section 280E nor the Controlled Substances Act makes exception for medically necessary marijuana, we lack the authority to publish the guidance that you request. The result you seek would require the Congress to amend either the Internal Revenue Code or the Controlled Substances Act.

Legal experts have said that the IRS’ hands are essentially tied. If this bill passes, University of Denver’s Sam Kamin says that may be enough for the IRS to loosen the rope and issue that guidance. “It definitely puts marijuana on much sounder footing and makes much clearer what the legal rights of marijuana businesses are,” he says.

Dan Riffle, director of federal policies for the Marijuana Policy Project, who worked with the Senators’ offices on the Hill to craft the bill, is more absolute in his interpretation: “It resolves the 280E issue.”

Both of them agree that the bill has the potential to affect other areas of life too, in states where medical marijuana is legal. It may prevent people from being fired for using marijuana as medicine. Parents may no longer lose custody of their kids for having medical marijuana in the house. Known medical-marijuana users could be allowed to legally own a firearm; if a drug user or addict currently possesses a firearm, that’s punishable by up to 10 years of jail time.

Malik Burnett, policy manager at the Drug Policy Alliance—which also had a hand in crafting the bill—cautions that these are only potential interpretations of a potential law and that separate, explicit legislation should be passed if reform advocates want to definitively solve these issues. But he says the bill would enable lawyers to make stronger arguments to protect clients who use medical marijuana. “You would certainly have more solid ground to stand on,” he says.

Since being introduced, the bill has gained two cosponsors: Republican Sen. Dean Heller of Nevada and, as of Monday, Democratic Sen. Barbara Boxer of California. Despite bipartisan support for the bill, it remains unclear whether it will be taken up in the Republican-controlled Senate.

The Davieses, in an interview for a previous article on their legal battle, said that they not only see themselves as a legitimate business but as a force of positive change in society. Lanette Davis said she felt they were being unfairly punished. “It has to do with taking care of the sick and ill. Jesus Christ made a statement that all people should care for one another, and this is our way of taking that to our community,” Lanette said. “What we try very hard to provide is a way for people to get well.”

TIME Illicit Drugs

Teens Are Using Drugs Far Less Than They Used To

Camden Battles Crime And Poverty In Effort To Re-Vitalize Community
Andrew Burton—Getty Images Reggy Colby, age 30 and a recovering heroin addict, displays a bag heroin is sold in, on August 21, 2013 in Camden, New Jersey.

About 8.8 % of young people surveyed were current illicit drug users, down 13% from 2009.

New data show that efforts to reduce drug use among teens have succeeded, to an extent.

Illicit drug use among people age 12 to 17 is down 24% since 2002, according to the 2013 National Survey on Drug Use and Health, released Tuesday by the Substance Abuse and Mental Health Services Administration. About 8.8 % of young people surveyed were current illicit drug users, down 13% from 2009. Fewer adolescents also reported consuming alcohol, with 11.6% reporting doing so in 2013 compared to 12.9% in 2012.

The survey also had promising data on the efforts to reduce opioid abuse. Though 4.5 million Americans 12-years-old and above reported using pain-relievers for non-medical purposes in 2013—a rate unchanged from 2011 and 2012—there was a slight decline among young adults who have had the highest rates of abuse. Abuse of opioids, including pain relievers and heroin, has been particularly concerning due to the rates of overdose among users.

About 24.6 million Americans are illicit drug users, according to the annual survey. The most common illicit drug among Americans is marijuana; about 19.8 million people reported using the drug within the past month in 2013.

TIME nation

First Recreational Marijuana Legally Sold in Seattle Donated to Museum

Elaine Thompson – AP In this July 8, 2014, file photo, Deb Greene, 65, Cannabis City's first customer, displays her purchase of legal recreational marijuana at the store in Seattle.

A marijuana milestone saved for posterity

The first marijuana sold for recreational purposes in Seattle is being donated to the city’s Museum of History and Industry, the Associated Press reports.

Deb Greene, a 65-year old grandmother, purchased it at the store Cannabis City on July 8, when the state’s first legal, recreational marijuana stores opened. The retiree brought “a chair, sleeping bag, food, water and a 930-page book” so she could camp out overnight and be the first in line, the AP reported at the time.

She purchased two bags of legal weed, one for personal use and another that was signed by Cannabis City owner, James Lathrop, so it could be “saved forever,” Greene told the Seattle Times. “You don’t use history.”

As Greene told the Puget Sound Business Journal, “I wanted to be a part of this, this is part of the history of our city.”

MORE: The Rules About Pot Just Changed in Washington D.C.

MORE: House Votes to Help Pot Businesses Use Banks

TIME White House

Obama’s New Drug Policy Looks a Lot Like the Old One

Michael Botticelli
Erica Yoon—AP Michael Botticelli, left, acting director of National Drug Control Policy, speaks to community leaders in Roanoke, Va., on July 9, 2014

A new emphasis on treatment and addiction, but no change on marijuana

The Obama Administration unveiled an updated drug policy Thursday, including a new emphasis on treatment and addiction programs and a push to curb abuse of heroin and prescription painkillers.

Michael Botticelli, the acting director of the Office of National Drug Control Policy, framed the retooled strategy as a shift away from the punitive policies that have produced record incarceration rates.

“Our prisons and jails are already overcrowded with people who desperately need compassionate, evidence-based treatment for the disease of addiction—not a jail cell,” Botticelli said in a statement before an event in Roanoke, Va.

Among the elements of the plan are expanded access to drug education, treating drug addition as a health issue rather than a criminal one, and a push to divert nonviolent drug offenders into treatment rather than prisons. It promotes tackling the twin scourges of heroin and prescription opiates, whose abuse rates have climbed.

The Administration’s call for criminal-justice reform reflects widespread agreement, inside the White House and out, that the war on drugs has been a misbegotten failure. The Department of Justice has emphasized the need to overhaul its approach from being “tough on crime” to being “smart on crime.” The updated policy is a continuation of that strategy. “The plan we released today calls for reforming our criminal justice system to find alternatives to incarceration—and effective interventions across the entire system to get people the treatment they need.”

But for the most part, the Administration’s approach looks like more of the same. It outlines no changes to the White House’s approach to marijuana, a blow to legalization advocates in the same week that Washington state became the second to legalize the sale of cannibis to adults for recreational purposes.

Despite the President’s belief that pot is less harmful than alcohol, federal law still classifies it as a Schedule I drug on par with cocaine and ecstasy. Discrepancies between state and federal pot laws have blocked legitimate weed-business owners from accessing banks and left the threat of jail time looming over users, sellers and growers even in states where some form of the drug is now legal.

The new strategy calls the increasing perception that cannabis is relatively harmless—fed not only by state legalization efforts, but also perhaps the President’s own remarks to that effect—a “serious challenge” to drug reform efforts.

“The drug czar’s office is still tone deaf when it comes to marijuana policy,” said Mason Tvert, spokesman for the Marijuana Policy Project. “Why stay the course when the current policy has utterly failed to accomplish its goals?”

TIME White House

In Second Term, Obama Uses Pot Past to Push Reforms, Reach Youth

President Barack Obama speaks during an event on the bloging site Tumblr, in the State Dining Room on June 10, 2014 in Washington, DC.
Mandel Ngan—AFP/Getty Images President Barack Obama speaks during a Tumblr Q&A in the State Dining Room on June 10, 2014 in Washington, DC.

Part 'cool factor' and part cautionary tale, Obama talks about his drug-using past.

During a Tumblr chat at the White House this week, President Barack Obama winked at the crowd of youngsters as he discussed his high school years. “I actually loved math and science until I got into high school,” Obama said. “And then I misspent those years.” He paused and smiled while the crowd, naturally, erupted with laughter.

The President’s allusion was clear: he spent his high school years in Hawaii smoking joints with his friends. Well into his second term with his poll numbers declining and his ability to push legislation through Congress diminished, Obama is becoming more vocal about his past drug use as both a cautionary tale and to connect with young audiences.

His frankness coincides with evolving national attitudes toward drugs. Since his re-election, Colorado and Washington State have legalized marijuana for recreational use, while more states have moved to decriminalize possession of cannabis. The White House Office of National Drug Control Policy has been relegated to a minor role. Meanwhile, the Obama administration is deep into a top down revision of the what Attorney General Eric Holder has called “draconian” mandatory minimum sentences for drugs.

Long before Obama became a Presidential candidate, he used his own drug use was central storyline in his 1995 memoir Dreams from my Father. “Nobody asked you whether your father was a fat-cat executive who cheated on his wife or some laid-off joe who slapped you around whenever he bothered to come home,” Obama wrote of his drug-filled years. “You might just be bored, or alone. Everybody was welcome into the club of disaffection. And if the high didn’t solve whatever it was that was getting you down, it could at least help you laugh at the world’s ongoing folly and see through all the hypocrisy and bullshit and cheap moralism.”

As he sought higher office, that part of the Obama narrative faded from view. In the heat of the 2008 primary, Hillary Clinton’s New Hampshire co-chair, Billy Shaheen, resigned his position after suggesting that Republicans would use Obama’s drug history against him, even suggesting Obama once sold drugs, a charge that prompted a personal in-person apology from Clinton to Obama.

But Obama’s re-election opened the floodgates for presidential drug talk. “I remember when BuzzFeed was something I did in college around 2 a.m.,” he cracked at the White House Correspondents Dinner last year. This year he called Colorado’s legalization effort “an interesting social experiment.”

White House aides caution that the move is not a strategic shift, but concede that his openness on the subject is a reflection of his newfound freedom having put his final campaign behind him. Yet the timing of it all hasn’t gone unnoticed. Over the past year, the Obama Administration has been rolling out piecemeal reforms to sentencing laws aimed at reducing the number of low-level prisoners facing lengthy sentences for drug crimes.

Though Congress stalled on legislation that would cap the mandatory sentences blamed for filling the nation’s federal prisons, the Obama Administration has urged judges to avoid mandatory minimums. Holder has singled out states for disenfranchising former prisoners, calling for an all out repeal of such laws in February. After Obama commuted the sentences of eight federal prisoners facing life sentences for nonviolent drug offenses in December, the administration wanted more, launching a massive call for applications for commutations, and removing the head of the U.S. Pardon office in the process.

Last week, Attorney General Holder formally backed a U.S. Sentencing Commission proposal that could reduce the prison sentences of 20,000 people currently behind bars for nonviolent drug offense. The measure could reduce sentences by an average of 23 months. Obama met with the commission on Wednesday to be briefed on the proposal. Combined with the My Brother’s Keeper initiative to provide paths to opportunity for young minority men, it’s as if President Obama had a heart-to-heart with young Barry O—the young man he wrote about heading toward becoming a “Junkie. Pothead.”

He has also been sharing his story with young people. “When it was my turn, I explained to them that when I was their age I was a lot like them,” he retold in February, about a meeting the previous year with a group of Chicago teenagers. “I didn’t have a dad in the house. And I was angry about it, even though I didn’t necessarily realize it at the time. I made bad choices. I got high without always thinking about the harm that it could do. I didn’t always take school as seriously as I should have. I made excuses. Sometimes I sold myself short.”

In a wide-ranging interview with The New Yorker’s David Remnick late last year, Obama referenced his own past to call for a new approach, “We should not be locking up kids or individual users for long stretches of jail time when some of the folks who are writing those laws have probably done the same thing,” he said.

The drug reforms could well become the defining domestic policy achievements of his second term, but in the short term, the nods to his “misspent” past keep him relevant among his most loyal supporters: youth. Speaking at a high school graduation last week in Massachusetts he admitted that he did not recall his own graduation speaker, drawing a laugh from the assembled students. “I have no idea who it was,” he said. “I’m sure I was thinking about the party after graduation. I don’t remember the party either.”

TIME justice

Lower Sentences for Drug Offenses Could Come Into Effect Soon

Inmates serving a jail sentence make a phone call at Maricopa County's Tent City jail in Phoenix
© Joshua Lott —Reuters The U.S. is moving toward cutting prison sentences for dug offenders as part of an effort to cut the surging prison population

The U.S. Sentencing Commission said on Thursday that prison sentences for low-level drug offenders should be cut by an average of almost a year, unless Congress blocks the change, to help deflate the surging federal prison population

Prison terms for most drug offenses in the U.S. should be cut by an average of close to a year, the U.S. Sentencing Commission recommended Thursday.

The commission voted unanimously to cut lower-level drug penalties, and its recommendations will go into effect in November if Congress doesn’t block them.

Around 70% of drug trafficking defendants would qualify for the reduction, and their sentences would be mostly cut by around 11 months, from 62 to 51 months on average, according to the commission.

The move is part of an effort to reduce the growing federal prison population, and the policy is supported by the Obama administration.

“This modest reduction in drug penalties is an important step toward reducing the problem of prison overcrowding at the federal level in a proportionate and fair manner,” the U.S. District Judge Patti Saris, the commission’s chairwoman, said in a statement.

“Reducing the federal prison population has become urgent, with that population almost three times where it was in 1991.”

The lower prison sentences could cut the overall federal prison population by more than 6,500 inmates over five years, the commission said. Currently around 216,000 Americans are in prison for drug offenses.

TIME Congress

Medical-Marijuana Advocates Descend on Capitol Hill

More than 100 marijuana-legalization advocates went to Washington to lobby lawmakers on a subject that has seen little action in Congress despite a rising tide of Americans supporting legalization for medical purposes

Medical-marijuana supporters flocked to Capitol Hill on Monday to push for legislation that would prohibit the federal government from restricting state medical-marijuana laws.

“We’re doing this work,” said Steph Sherer, executive director of Americans for Safe Access, a pro-medical-pot group that brought 152 people to Washington to lobby 300 members of Congress. “It’s not just a bunch of potheads [saying], Please let us do this.”

The House bill would offer legal clarity to the growing number of states that are legalizing medical marijuana even as it remains illegal under federal law. New York might become the 21st state to legalize medicinal marijuana this year, but the Drug Enforcement Agency considers marijuana a drug on the same level as heroin, and the Justice Department under the Obama Administration hasn’t always been consistent in its level of prosecutorial restraint and its willingness to defer to state laws.

The bill is a long shot, to say the least, but advocates aren’t letting that dent their enthusiasm. Sherer pointed to groups that have issued scientific standards for quality control in medical-marijuana products as a way of showing its increasingly mainstream status. Sherer uses cannabis daily; she says she can’t get out of bed without it because of a disorder called dystonia, which causes her muscles to contract involuntarily. She called herself one of a million legal medical-cannabis patients in America.

“Once you use this medication and it works for you, or you see it work for a loved one, it really is crazy that we can’t even get a hearing at this point,” Sherer said. “We’re actually regulating this product from seed to consumption.”

But the pro-cannabis message will likely fall on deaf ears. It’s a nonstarter in the Republican-controlled House — Dan Rush, who directs the medical-cannabis department at the United Food and Commercial Workers union, listed California Representative Dana Rohrabacher as the sole exception to what he called an “entire Republican side of the building” opposed to legalization. And Democrats who control the Senate are hardly ready to make it a priority in a midterm-election year. The American public increasingly favors legalization, and for the first time, a CBS poll in January showed a slight majority supporting it.

Medical-marijuana advocates may find more success working through the Executive Branch. On Friday, Attorney General Eric Holder said the Obama Administration is ready to work with Congress to take marijuana off the federal government’s list of the most dangerous drugs. Obama has said marijuana is “not very different” from cigarettes and less dangerous “on the individual consumer” than alcohol.

Marijuana advocates just want things to change.

“I don’t care who fixes it,” Sherer said. “But it seems like we keep getting ping-ponged around.”

TIME Drug Policy

Heroin Deaths Spike in Cleveland Area

A Cleveland police officer looks over bags of heroin at a news conference in Cleveland, Ohio, in 2010.
Amy Sancetta—AP A Cleveland police officer looks over bags of heroin at a news conference in Cleveland, Ohio, in 2010.

New figures released by a Cleveland medical examiner show heroin-induced deaths in the metropolitan area hit a record 195 last year, well above the 161 in 2012, highlighting what Attorney General Eric Holder calls an “urgent and growing public health crisis"

Heroin-induced deaths have risen sharply in the Cleveland metropolitan area to a record 195 last year, a local medical examiner said Thursday.

The 2013 heroin-related death toll in Cuyahoga County in Ohio was a significant increase from 161 overdose deaths in 2012 and just 40 in 2007, Cleveland.com reports, and the latest example of what Attorney General Eric Holder on Monday called an “urgent and growing public health crisis.”

“It was my hope that 2013 would see the number of heroin fatalities decrease, but that was not the case,” said Dr. Thomas Gilson, the Cuyahoga County medical examiner. There were more heroin-related deaths than homicides.

Authorities across the country are confronting a resurgence in heroin, fueled partly by a larger, cheaper supply from Latin American cartels and a bigger market for opiates driven by prescription painkillers.

In his address earlier this week, Holder announced that the Justice Department would combat the epidemic through a mix of enforcement and treatment efforts. Heroin use has been rising nationwide since 2007, growing from 373,000 yearly users to 669,000 in 2012, according to the Substance Abuse and Mental Health Services Administration. Heroin overdose deaths have also spiked, increasing 45 percent from 2006 to 2010, according to the most recently available data from the Drug Enforcement Administration.

[Cleveland.com]

TIME Law

Colorado Court Says Pot Convictions Could Be Overturned Under New Law

Convictions that were under appeal when the new law allowing recreational weed took effect can be thrown out, a Colorado court ruled Thursday. The decision could impact hundreds of people who were jailed for pot possession

An appeals court in Colorado ruled Thursday that some people previously convicted of marijuana possession could have their convictions overturned after voters in the state legalized recreational marijuana in 2012.

The Colorado Court of Appeals, considering the case of a women convicted of multiple drug charges, said convictions for possession of small amounts of marijuana that were under appeal when the law took effect could have their convictions reversed, the Associated Press reports. The ruling could impact hundreds of people who were jailed for possession of marijuana, marijuana legalization advocate Brian Vicente told the AP.

The office of the state Attorney General said prosecutors are reviewing the opinion to determine any next steps.

[AP]

TIME Marijuana

Medical Marijuana: California Bill Would Provide More Oversight

Pot Prices Double as Colorado Retailers Roll Out Green Carpet
Bloomberg —Getty Images THC in marijuana triggers the olfactory senses.

Doctors issuing more than 100 recommendations per year would be investigated

A bill introduced by a California state senator would bring some clarity to the hazy medical marijuana industry in the state, which has operated without much oversight for nearly two decades, since California voters legalized the substance in 1996.

The bill, proposed by Sen. Lou Correa, an Orange County-area Democrat, would require the state’s Department of Public Health to license growers and dispensaries. It would prohibit non-organic pesticides in cultivation, mandate strict security measures at grow-houses and shops, and institute a system of “quality assurance.”

An investigation carried out by the Denver Post this week shows how common it is for dispensary customers to get less than they paid for; testing a popular brand of edible products, independent firms found 0.37 and 0.28 milligrams of psychoactive component THC in chocolate bars that promised to pack 100 milligrams.

The bill would also crack down on doctors who are writing recommendations for marijuana more freely than they should; any doctor giving out more than 100 in a year would be subject to an audit by the state medical board, and all doctors wanting to write recommendations would go through mandatory training.

The Associated Press reports that the bill was conceived by California Police Chiefs Association and the League of California Cities, as a countermeasure to the vague law passed in 1996 that sprouted a multi-billion dollar industry.

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