Legal marijuana business owners are being sued for tax fraud and breach of contract, according to a new report from Axios.
The National Association of Marijuana Dispensaries, or NAMDA, claims that over 1,000 cannabis businesses are being used by the federal government to avoid paying taxes, while at the same time avoiding compliance with the law.
“The federal government is illegally using the legal marijuana industry to evade paying taxes,” NAMTA president and CEO, Michael C. Hargrove, said in a statement.
“If you’re selling marijuana, you’re not just buying it, you’ve also purchased a license from the federal Drug Enforcement Administration, which requires the federal Government to check for your compliance with all laws.”
Cannabis business owners and owners of non-commercial marijuana dispensaries can be held liable for the tax payments and damages they make to the government if they are found to have been “grossly negligent” in their actions, Hargrock said.
The NAMAA is one of the few advocacy organizations to have issued an official complaint against the federal drug agency, as they claim it “continues to violate federal law by using marijuana businesses to evade taxes.”
Hargrop says he’s heard from at least two cannabis business owners who have lost at least $10 million to the federal federal government.
The NAMMA claims to have filed a lawsuit against the DEA for “fraudulent misrepresentations” in recent years.
According to the NAMFA, the DEA claims that cannabis is a schedule 1 controlled substance, meaning it has no medical value.
However, the NAMI says that cannabis products containing THC, the active ingredient in cannabis, can have medical uses and can have a high level of potential for addiction.
The DEA has been targeting cannabis companies that are selling to individuals and corporations, and has targeted dispensaries that sell medical marijuana, which is legal in 25 states and the District of Columbia.
The DEA claims cannabis is no more addictive than alcohol.
“As the government continues to make the marijuana industry illegal, the federal law that protects cannabis is being violated at the state and local level,” Hargreaves statement said.
“The National Alliance for Responsible Cannabis Regulation is suing the DEA in an attempt to hold the DEA accountable for its violations of the Controlled Substances Act.”
The DEA is also claiming that cannabis use is a violation of federal law, though Hargrogves organization says the agency has been following the law since before the law was passed.
The government claims that the cannabis industry is not an organized criminal enterprise, as it is not a criminal enterprise with any specific criminal activity, but rather is an illegal and unregulated business, according the NAMA.