Medical marijuana remains illegal at the federal level, despite Colorado Amendment 20 and Amendment 64; therefore, federal tax law still prohibits medical marijuana users from writing off cannabis remedies as a medical expense on their income tax.Taxpayers who have medical expenses that exceed 10 percent of their household adjusted gross income, or 7.5 percent if one of the filers is 65 or older, are able to deduct the medical expenses over that amount, according to the Internal Revenue Service. However, instructions in IRS Publication 502 are clear: ìYou cannot include in medical expenses amounts you pay for controlled substances (such as marijuana, laetrile, etc.) that are not legal under federal law, even if such substances are legalized by state law,î according to the 2014 tax year document.Medical insurance companies are also prohibited from reimbursing or paying for medical marijuana. The lack of write-offs and insurance coverage keep people who might otherwise use medicinal cannabis from trying it. ìI think it has a huge impact,î said Jason Warf, legislative director of the Southern Colorado Cannabis Council. ìMost people can’t afford to go into dispensaries with no write-offs and no insurance coverage.îDespite efforts at the state and federal level to improve access to medical marijuana in states where it is legal at the state level, there are no current efforts to change the income tax code. Advocacy organizations are instead working to directly help lower income patients. ìWhat we’re looking at in the future is programs for indigent patients,î Warf said. ìOne of the things we’re doing next legislative session is working on a Patients Bill of Rights that will cover a broad scheme of these issues.îCongress blocked the U.S. Department of Justice from spending any money on prosecuting medical marijuana dispensaries or their patients; however, that does not apply to other federal agencies. ìWhat we have seen is since the DOJ has been ordered to back off is that the powers-that-be is using the IRS to go after dispensaries and patients,î Warf said. ìWe’ve seen a huge increase in audits, and that’s a back door to attack our industry.î
