Marijuana Dispensary Must Disclose Documents in Tax Court

Feinberg v. C.I.R., 2015 WL 9244893 (12/18/15) (12/18/15) (Col.) (Published) - The 10th refuses to grant on Fifth Amendment grounds a writ of mandamus to prevent the government from obtaining in discovery documents showing the nature of the business of a Colorado marijuana dispensary. Total Health Concepts ["THC"] challenged in tax court the IRS's refusal to recognize business expense deductions because the enterprise is illegal under federal law. THC contended revealing the nature-of-business documents would violate its owners' privilege not to incriminate themselves, The government responded that the AG's memo stating the policy that the AG would not prosecute Colorado marijuana dispensaries as long as they followed state law assures that any documents discovered would not be used to prosecute THC. The 10th is skeptical of that argument, given that the current Attorney General or a new AG could change that policy. But 10th precedent says now is not the time to address the issue. A later appeal could redress the problem, the precedent says, either on an appeal of a contempt citation or on appeal after disclosure and a trial. The 10th and the government seem to agree that at a criminal trial the THC owners could move to suppress the discovered materials on the grounds that they were involuntarily produced.