The owner of the first marijuana dispensary in the United States in 1997 is broke and embroiled in a battle with the IRS. Cannabis activist Lynnette M. Shaw opened the first licensed medical marijuana dispensary with dreams of helping chronic pain sufferers garner organic medication is now struggling to pay the IRS $1.27 million in back income taxes and penalties, Forbes reports. The marijuana dispensary owner filed recently for personal bankruptcy, listing a $276,000 state sales tax bill among her debts.
Fiscal problems for Shaw’s cannabis center spawned from a decision by the IRS to deny business expense deductions for medical marijuana dispensaries. U.S Tax Code Section 280E notes tax deductions for businesses trafficking in controlled substances is prohibited by federal law. For unknown reasons, Shaw did not file to have her medical marijuana dispensary become a non-profit and opted to run the center a sole-proprietorship. Shaw’s recent tax returns note America’s oldest medical marijuana dispensary earned more than $1 million in annual sales.
Lynnette Shaw closed the medical marijuana dispensary in Fairax, California near the end of last year after U.S. Attorney for Northern California Melinda Haag threatened to seize the building. The letter about Shaw’s marijuana dispensary was part of a “coordinated crackdown” by four U.S. Attorneys in California to close cannabis businesses which violated state law by operating too close to park or school, Cannabis Culture reports.
Haag filed two lawsuits earlier this week in relation to the threatened seizure. California’s largest medical marijuana dispensary, the Harborside Health Center was also targeted in the cannabis crackdown. The Harborside Health Center was recently featured on the Discovery Chanel reality show, “Weed Wars.” According to statements from the marijuana dispensary published by Forbes, the facility will continue to operate and has received support from Oakland officials.
Currently 17 states and the District of Columbia has legalized or decriminalized some type of medical marijuana usage. More states are considering similar measures during the November election. Progressive Corporation founder Peter Lewis is a major backer of medical marijuana legalization legislation issues.
Shaw is often credited with playing a major role in California’s Proposition 215, the referendum which paved the way for medical marijuana dispensaries in the state, and possible throughout the nation. Lynnette M. Shaw also ran on the Libertarian Party ticket for Lieutenant Governor in 2006. Country music singer Willie Nelson endorsed her candidacy. Later comedic actor John Belushi chose Shaw to sing with the Blues Brothers shortly before his death in 1982.