IRS NOT HIGH ON MARIJUANA USE.

Rev. Rul. 97-9

ISSUE

[1] Is an amount paid to obtain a controlled substance (such as marijuana) for medical purposes, in violation of federal law, a deductible expense for medical care under section 213 of the Internal Revenue Code?

FACTS

[2] Based on the recommendation of a physician, A purchased marijuana and used it to treat A's disease in a state whose laws permit such purchase and use.

LAW AND ANALYSIS

[3] Section 213(a) allows a deduction for uncompensated expenses of an individual for medical care to the extent such expenses exceed 7.5 percent of adjusted gross income. Section 213(d)(1) provides, in part, that "medical care" means amounts paid for the cure, mitigation, and treatment of disease. However, under section 213(b) an amount paid for medicine or a drug is an expense for medical care under section 213(a) only if the medicine or drug is a prescribed drug or insulin. Section 213(d)(3) provides that a "prescribed drug" is a drug or biological that requires a prescription of a physician for its use by an individual.

[4] Section 1.213-1(e)(2) of the Income Tax Regulations provides, in part, that the term "medicine and drugs" includes only items that are "legally procured." Section 1.213-1(e)(1)(ii) provides that amounts expended for illegal operations or treatments are not deductible.

[5] Rev. Rul. 78-325, 1978-2 C.B. 124, holds that amounts paid by a taxpayer for laetrile, prescribed by a physician for the medical treatment of the taxpayer's illness, are expenses for medicine and drugs that are deductible under section 213. The revenue ruling states that the laetrile was purchased and used in a locality where its sale and use were legal.

[6] Rev. Rul. 73-201, 1973-1 C.B. 140, holds that amounts paid for a vasectomy and an abortion are expenses for medical care that are deductible under section 213. The revenue ruling states that neither procedure was illegal under state law.

[7] A's purchase and use of marijuana were permitted under the laws of A's state. However, marijuana is listed as a controlled substance on Schedule I of the Controlled Substances Act (CSA), 21 U.S.C. sections 801-971. 21 U.S.C. section 812(c). Except as authorized by the CSA, it is unlawful for any person to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance. 21 U.S.C. section 841(a). Further, it is unlawful for any person knowingly or intentionally to possess a controlled substance except as authorized by the CSA. 21 U.S.C. 844(a). Generally, the CSA does not permit the possession of controlled substances listed on Schedule I, even for medical purposes, and even with a physician's prescription.

[8] Notwithstanding state law, a controlled substance (such as marijuana), obtained in violation of the CSA, is not "legally procured" within the meaning of section 1.213-1(e)(2). Further, an amount expended to obtain a controlled substance (such as marijuana) in violation of the CSA is an amount expended for an illegal treatment within the meaning of section 1.213-1(e)(1)(ii). Accordingly, A may not deduct under section 213 the amount A paid to purchase marijuana.

HOLDING

[9] An amount paid to obtain a controlled substance (such as marijuana) for medical purposes, in violation of federal law, is not a deductible expense for medical care under section 213. This holding applies even if the state law requires a prescription of a physician to obtain and use the controlled substance and the taxpayer obtains a prescription.

EFFECT ON OTHER DOCUMENTS

[10] Rev. Rul. 78-325 is obsoleted. Subsequent to the issuance of Rev. Rul. 78-325, the courts have upheld the Food and Drug Administration determination that generally prohibits interstate commerce in laetrile under the Food, Drug, and Cosmetic Act, 21 U.S.C. sections 331 and 355(a). See United States v. Rutherford, 442 U.S. 544 (1979); Rutherford v. United States, 806 F.2d 1455 (10th Cir. 1986). Thus, notwithstanding state and local law, laetrile cannot be legally procured within the meaning of section 1.213- 1(e)(2). Accordingly, amounts paid to obtain laetrile are not deductible under section 213.

[11] Rev. Rul. 73-201 is clarified to reflect that the medical procedures at issue in that revenue ruling are not illegal under federal law.

DRAFTING INFORMATION

[12] The principal authors of this revenue ruling are Donna M. Crisalli and Sharon Hester of the Office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this revenue ruling, contact Ms. Crisalli or Ms. Hester on (202) 622-4920 (not a toll-free call).