Daily Literature of Revolution

• Via Cafehayek comes this link to Dierdre’s McCloskey’s review of Michael J. Sandel’s What Money Can’t Buy:  The Moral Limits of Markets.  McCloskey, like Sandel, is interested in the moral dimension of commercial society.  However, she presents a very different view of morality in our modern marketplace.  In a projected pentad, McCloskey will show that when it comes to the seven virtues, free market capitalism delivers the goods.  (She’s finished two; I’ve read the first one and it is impressive).  For an aperitif, her website contains links to shorter essays on the topic.  McCloskey’s apologia for the market is aretaic—meeting people like Sandel on his alleged home-turf.  For a utilitarian analysis, I’ve always enjoyed Richard Epstein’s essay “Libertarianism and Character.”  

• Meanwhile, London has some bad news for Cameroon, a country that has yet to embrace capitalism or individual rights.  Via Reason’s 24/7 Newsfeed:  7 Cameroonian athletes have fled the Olympic Village.  The BBC tentatively notes the most logical explanation—namely, that the competitors are determined to remain in the relatively greener pastures of Europe.  Last week, the New York Times had a short article on asylum-seeking athletes.  In the Olympic’s vainglorious haze, these stories of human desperation crop up fairly often.  At least one dash for freedom has led to political asylum.  I’ll try to stay updated on this story, including any compelling legal aspects.  

• If you are a state-sanctioned medical marijuana dispensary (MMD), the Feds may or may not arrest you, but they certainly will take your money.  Illegal income is taxable; this much is well-established law.  Last Thursday, though, the tax code became medical marijuana’s fully loaded lethal enemy.  Here’s the rub for dispensary owners:  section 280E maintains that a taxpayer may not deduct expenses incurred in the trafficking of controlled substances, including medical marijuana.  Applied literally and stringently, this could leave MMDs paying taxes on their entire gross income, an untenable proposition for most any business. Previously, in Californians Helping to Alleviate Medical Problems, Inc. v. Commissioner (CHAMPS), the Tax Court fashioned a reasonable compromise by separating a dispensary’s caregiving expenses (deductible) and it’s pot-selling expenses (non-deductible).  But with the Vapor Room’s case (Olive) last week, the Tax Court hath taken away (or severely limited) this minor solace.  Now MMDs must pass a high standard in showing that they maintain a second business (one that is not pot trafficking).  In Olive, the Court found that the Vapor Room was solely engaged in marijuana selling.  (p. 33, Olive).  In turn, the court declined to bifurcate the expenses, sticking the Vapor Room with all their operating costs.  (p. 39, Olive).  They can’t deduct wages, salaries, rent, payroll tax, repairs, security, utilities…nothing!  MMDs may still deduct the Cost of Goods Sold (yes, even their pot), but their sales record will be thoroughly scrutinized.  Reading through the Olive opinion, you get a sense that the Court regarded the Vapor Room as a lackadaisical outfit; whereas, in the CHAMPS case, the Court seemed impressed by the dispensary’s staid and conventional directors (note p. 20-1, CHAMPS).  Whether you’re on the left or right, this case should cast light on the Federal government’s incorrigible tentacles.  On a lighter note, the Tax Court does seem favorable to MMDs renting out extra space and offering yoga classes for its customers (p. 6, CHAMPS case).