Why is IRS Focused on Marijuana Nonprofits


The Washington Post reported that a federal watchdog highlighted as many as 146 cases where the Internal Revenue Service went after liberal-leaning groups. This includes non-profits working on medical marijuana issues who were scrutinized based on their names or political leanings. The report stated, “The IRS identified the medical marijuana organizations for further scrutiny because of concerns that they were engaging in activities that were not permissible under tax-exempt law,” said the treasury of general for tax administration. The TIGTA went on to say, “Specifically, some states were legalizing the use of medical marijuana, but it was illegal under federal law,” the TIGTA continues, “so the organizations did not meet the requirements for federal tax exemption.

Eighty-three of the groups that were investigated were chosen because of the IRS’s selection criteria, which notifies them to groups based on certain terms like “Occupy,” “medical marijuana” and “Progressive,” as well as any affiliation with the Association of Community Organization for Reform Now (ACORN). The Washington Post report stated, “ the IRS inappropriately selected organizations for scrutiny based on their names or policy positions,” rather than on actual evidence of inappropriate activity.

Various organizations that applied for IRS tax-exempt status focus on education around cannabis policy issues and are not involved in touching the plant, according to the Marijuana Moment. Due to the IRS’s habit of alerting agency officials based on organization’s name, some of their applications were unnecessarily delayed and presented with improper requests for information on their donors and activities. The report said, “All of the medical marijuana cases took longer than average to process compared to the IRS’s overall average for non-merit in each fiscal year,” the review found.

The review stated, “We determined that 10 organizations whose applications we confirmed were processed based on the medical marijuana criterion received letters requesting additional information to complete processing of their application. We reviewed these additional request letters and determined that four of the organizations received a request for information that TIGTA had concluded was unnecessary for processing political advocacy cases in our prior review.”


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