The Internal Revenue Service expects hooligans of the black market drug trade to pay taxes, but not even the most clever accountant will be able to deduct medical marijuana on their clients’ federal tax returns this year.
Despite the sweet leaf being legal for medicinal purposes in almost half of the United States, the federal government refuses to consider cannabis a medical expense because it remains a Schedule I controlled substance. “You cannot include in medical expenses amounts you pay for illegal operations, treatments, or controlled substances whether rendered or prescribed by licensed or unlicensed practitioners,” according to Publication 502.
Interestingly, while medical marijuana does not qualify as a federal tax deduction, the Department of the Treasury will allow patients suffering from alcoholism and drug addiction to write off expenses incurred as a result of those treatments, including travel and meal expenses for those attending Alcoholics Anonymous.
Even in states where medical marijuana is a legally accepted treatment option, tax experts claim there is not much of a chance that patients will be allowed to deduct medicinal cannabis on their state tax return. “Many states follow federal rules—using federal adjusted gross income for the basis of state income tax—so it wouldn’t be deductible in these states,” Barbara Weltman, a Florida tax attorney, recently told Consumer Reports.
Unfortunately, this puts the over one million patients in the United States currently using medical marijuana at a disadvantage, especially since the annual cost of cannabis medicine can be upwards of $6,500, with no health insurance coverage. Yet even if medical marijuana was not a pariah of federal tax laws, the IRS would only allow the deduction if a patient’s medical expenses exceeded 10 percent of their gross adjusted household income.