You might well be able to do something under state law. For example: Sell marijuana.
But you can't beat the Tax Man.
The Ninth Circuit holds this morning that if you're a medical marijuana dispensary, you can't deduct any business expenses. That's right: any. Not even the ones you legitimately incurred.
Did Congress have this result in mind when it passed the relevant tax statute? Perhaps not. But that statute is nonetheless clear. It says that a taxpayer can't deduct any expenses if the relevant "trade or business . . . consists of trafficking in controlled substances . . . prohibited by Federal law."
For better or worse, that's on point to what a marijuana dispensary does. Because, as a reminder, marijuana remains illegal -- e.g., a controlled substance -- under federal law.
Martin Olive has a couple of legal arguments as to why the statute shouldn't apply. But as the panel correctly holds, they're not persuasive. The statute means what it says. You can still operate a marijuana dispensary if you want. But you're going to have to pay taxes on your gross profit, not your net.
Which isn't going to be very much fun.