Colorado’s Marijuana Tax: Does Taxation=Self-Incrimination?


Colorado’s taxes on marijuana have been upheld by a state court, which rejected the argument that paying the taxes could amount to self-incrimination, violating the Fifth Amendment. Tax attorney Rob Wood discusses the situation in this report as well as in his Forbes article “Marijuana Taxes Are Upheld, But Paying Them Could Incriminate You.” Note The lawsuit will continue, and the ultimate outcome is not certain at this writing. The trial court refused to grant a preliminary injunction but did not rule on other claims for relief.]

Rob wood

Rob wood

The legalization of marijuana has run head-on into federal law, under which marijuana is a controlled substance, and possession of marijuana exposes one to criminal penalties. Even though many states now permit medical marijuana, and the federal government is not presently pursuing users, the law remains on the books. And, Wood explains, because of marijuana’s status as an illegal drug under federal law, companies in the marijuana business cannot deduct their business expenses on their federal tax returns.

Wood believes that there needs to be a resolution to the tax deduction issue, quite apart from any other issues involved. Wood feels that the Fifth Amendment argue will ultimately fail, but he thinks the argument is a good one.

For more information on the subject, please refer to Mr. Wood’s article in Forbes. Robert Wood is a tax attorney with Wood, LLP in San Francisco, California and spoke with The Tax Law Channel, an affiliate of The Legal Broadcast Network.  The Legal Broadcast Network is a featured network of the Sequence Media Group.