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California Medical Cannabis Dispensary Owes $4.2 Million, US Tax Court Rules

The Tax Court determined San Jose Wellness can’t claim tax deductions

A subsidiary of California-based cannabis retailer Harborside must pay nearly $4.2 million in back taxes and penalties after losing a case in U.S. Tax Court.

The Tax Court determined in a decision issued Wednesday that San Jose Wellness, the Harborside subsidiary, can’t claim tax deductions for depreciation or charitable contributions under Section 280E of the IRS code.

Law360.com first reported the decision.

The San Jose Wellness case is separate from a larger, roughly $11 million Harborside tax case pending in the 9th Circuit Court of Appeals in San Francisco.

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