The legalization and prescription of so-called “medical marijuana” is increasing on a state by state basis. In a recent IRS Private Letter Ruling (No. 201940008), the organization at issue sought to obtain 501(c)(3) tax-exempt status. The organization raised funds to assist individuals in financial need to help them pay for their prescribed treatment with medical marijuana. Since almost every use of marijuana is still illegal under federal law, the IRS conclusion was not a surprise. The Conclusion of the letter says it all:
“While some of your activities may be educational and charitable in nature, and may be considered legal by the state you are currently operating in, you are conducting substantial non-exempt activities as you are promoting an activity that is considered illegal by federal law. Therefore, you do not qualify for exemption under Section 501(c)(3) of the Code.”
Consequently, even with the increased prevalence and legality of medical marijuana at the state level, it is still disfavored under federal law and related activities, no matter how charitable in nature, will not qualify for federal tax exemption.
Weston Hurd LLP