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Appeals Court Reaffirms That Dispensaries Can’t Deduct Business Expenses

A San Francisco federal appeals court dealt a financial setback to medical marijuana dispensaries Thursday, saying that — unlike other commercial enterprises — they can’t deduct business expenses from their taxable income because their product is prohibited by federal law.

The ruling by the Ninth U.S. Circuit Court of Appeals was also another blow to the Vapor Room, which operated as a pot-inhaling shop and social club in the Lower Haight neighborhood from 2004 until July 2012, when it shut down under pressure from U.S. Attorney Melinda Haag, who said she would seek its eviction for being too close to Duboce Park. Federal law increases penalties against marijuana dispensaries that are less than 1,000 feet from a school or playground, and the Vapor Room was 597 feet from the Duboce playground.

The business has continued as a delivery service, and owner Martin Olive recently announced plans to reopen at a new location. [Read more at the San Francisco Chronicle]

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