It's an issue that will face folks in L.A. March 8: To tax pot shops or not?

The L.A. City Attorney's office says a city tax on dispensaries would be illegal because the businesses are supposed to be nonprofit (and thus tax exempt) in the first place under California law.

Of course, Uncle Sam's cut is a way different story. And weed stores in the state are now being audited by the IRS. Yep, look out dispensary owners …

According to CNN shop owners could be in trouble because they don't get to deduct business expenses as, you know, DRUG TRAFFICKING ORGANIZATIONS.

You heard that right.

Unfortunately for L.A. bud lovers, the federal government still does not recognize the benefits of medicinal cannabis. And so, as outlaw businesses, pot shops can't make deductions for things like rent and payroll.

It's a, er, sticky situation. And, as you know, the IRS don't play.

Some pot shop advocates are hoping the IRS will bend the rules during its audits.

Steve DeAngelo of Harborside Health Center in Oakland says:

“I hope that what's going on is that the IRS is making a good faith attempt to understand our industry and to tax us like any other businesses would be taxed. And I'm in support of that. We want to pay our fair share of taxes.”

Good luck with that.

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