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Publication Date

December 2016

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This Article is the first to address whether independent governmental affiliates that sell marijuana are exempt from federal income tax under section 115 of the Internal Revenue Code. It argues that such entities should easily pass the IRS's current interpretation of the three requirements for tax-exemption under section 115: (i) that exempt income be derived from "the exercise of any essential governmental function"; (ii) that such income "accru[e] to a State or any political subdivision thereof"; and (iii) that the income "not serve private interests[.]" In addition, this Article argues that though selling marijuana is illegal under federal law, that fact is not a bar to exemption under section 115 of the Code the way it is under section 501 (c) (3).

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