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U.S. Supreme Court Declines to Hear Case Challenging IRS Summons in 280E Audits

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The U.S. Supreme Court has declined to hear a case challenging whether the Internal Revenue Service (IRS) can determine whether state-approved cannabis sales are prohibited by the federal Controlled Substances Act, Law360 reports.

The Green Solution LLC owner Eric Speidell and other cannabis companies petitioned the high court to hear their case following a previous decision by the Tenth Circuit Court that ruled the IRS could use 280E to determine whether a business or individual was in violation of criminal drug laws.

James D. Thorburn, an attorney for Speidell, in an interview with Law360 said the Supreme Court’s decision was “disappointing.”

“Our founders fought and died to keep revenue agents from having the unchecked power to rummage through our homes in search of contraband. Unfortunately, we have to accept that we just lost one of our most basic freedoms.”Thorburn to Law360

Acting Solicitor General Elizabeth Prelogar, the fourth-highest-ranking official in the U.S. Department of Justice, has twice filed briefs with the Supreme Court asking them to support the government’s positions in cannabis-related 280E cases and the previous decisions of lower courts.

The Tenth Circuit in October determined that a lower court correctly upheld the IRS summonses on the Green Solution and other companies owned by Speidell, as well as on Medicinal Wellness Center LLC, which joined Speidell in his legal challenge. The appeals court applied an April 2020 precedent in the Standing Akimbo LLC case which found that the IRS was justified in requesting information from the Colorado Department of Revenue during an audit.

In May, the Supreme Court also declined to hear an appeal case by California cannabis companies that sought to challenge their tax bills; however, that denial was based on the companies filing their petitions with the U.S. Tax Court one day after the deadline.

The court did not elaborate on its decision to turn down the Green Solution case.