my ordinary weed

Should You Use Medical Marijuana, AKA Medical Cannabis, if You Have Cancer?

A growing number of experts say yes. Here’s why — and how to use it safely.

Vincent Maida, MD, wants to be clear: He’s not some “hippie pothead.” But about 20 years ago, the Toronto-based palliative care physician realized that cannabis was worth taking seriously. At the time, cannabis — also known as marijuana — was not legal in Canada (or the United States). But, increasingly, he found his patients confiding in him about using it.

“They would say, ‘I’ve gone to my oncologist, they’ve given me all the [legal] drugs, but I’m still having pain, nausea, and vomiting. My friend got me some stuff from the local drug dealer, and it made me feel better,'” says Dr. Maida, who is an associate professor of palliative medicine at the University of Toronto. “I’ve heard that story hundreds of times.”

Although there may be a number of medical uses for cannabis, Maida says it’s especially beneficial for cancer patients and that it should be incorporated into their treatment regimen. In recent years, many western MDs who were previously skeptical have also started to come around to his thinking. A May 2019 study presented at the 2019 annual meeting of the American Society for Clinical Oncology, for instance, found that the overwhelming majority of surveyed oncology providers believe that medical marijuana can help cancer patients.

The catch: Less than half feel qualified to prescribe it.

Medical cannabis is now legal in the United States in most states, yet most healthcare providers haven’t received any education on it. Meanwhile, there’s little standardization. If you walk into any drugstore and buy a bottle of Advil, you know exactly what you’re getting. But cannabis strains (and their names) aren’t regulated and can vary from dispensary to dispensary. Strains also differ in terms of potency and specific effects (i.e., relaxing versus energizing) and, depending on your preferred delivery method, it can be difficult to measure a precise dose.

Despite these challenges, cannabis has many pros, especially when compared with the current FDA-approved options for treating cancer-related symptoms. It’s relatively safe — serious adverse effects are extremely rare — and it may ease nausea, pain, loss of appetite, and insomnia, says Jessie Gill, RN, a certified cannabis nurse. “Cannabis can also help prevent some of the nerve damage that’s often associated with chemotherapy and radiation,” she says. The fact that it’s one drug instead of several (one for nausea, one for pain, one for insomnia, etc.) also means that it might cut down on side effects and interactions.

How Medical Cannabis Works

If you’re looking for hard proof the cannabis really works, you’re going to be hard-pressed to find it. Thanks to a long history of prohibition as well as current federal restrictions, cannabis is extremely difficult to research, so most studies that pertain to its use in cancer have been small or conducted on animals. That may change as the laws evolve, but for now the best evidence is anecdotal.

Still, Maida says, you shouldn’t discount it: “Cannabinoids and other [cannabis] extracts have been used for thousands of years. The highest form of evidence is something that’s stood the test of time.”

Cannabis isn’t a cure-all, but it does seem to have the potential to work for a number of seemingly unrelated ailments. While that might seem suspicious, it’s hardly the only substance that has a myriad of effects, says Donald Abrams, MD, a professor of clinical medicine and integrative oncologist at the University of California in San Francisco.

“Aspirin is helpful for pain, inflammation, and fever, and some people like it for sleep,” he notes. In the case of cannabis, the wide-reaching effects can be explained by the fact that humans have cannabinoid receptors throughout the body.

Medical Cannabis: Tips for Beginners

Everyone reacts to cannabis differently, says Gill, but if you have cancer and cannabis is legal in your state, experimenting with it might make sense. Not sure where to start — or what to expect? Here are a few useful pointers.

  • Consider it an add-on, not a cure. Test-tube and animal studies have shown that cannabis might impact tumor cells, but don’t bank on it to cure your disease, says Dr. Abrams. It’s best used as an adjunct to ease symptoms, not as a cancer cure, so don’t ditch your oncologist and mainstream treatment plan.
  • Go for the whole plant. The two most famous components of cannabis are CBD (cannabidiol) and THC (tetrahydrocannabinol). CBD is anti-inflammatory and seems to be the chemical that’s largely responsible for a variety of health benefits, but it’s not the only active ingredient. A variety of fragrant oils (terpenes) may also play an important role, says Gill. Meanwhile, THC is best known for making you feel “high,” but it, too, has some health benefits. In fact, two FDA-approved drugs that are synthetic versions of THC Cesamet (nabilone) and Marinol (dronabinol) have been shown to help with nausea and vomiting in cancer patients. Still, Abrams says, it’s better to use the whole plant, because if you isolate one compound you’re likely missing out on others.

It’s also worth noting that CBD tends to balance out the psychoactive effects of THC, which is why some patients who try THC-heavy strains or FDA-approved drugs like Cesamet and Marinol often feel dizzy and drowsy, says Ashley Glode, PharmD, an assistant professor at the University of Colorado Skaggs School of Pharmacy and Pharmaceutical Sciences. She says that in Canada, where marijuana is now legal for both recreational and medicinal purposes, all the products that are sold for health purposes have a one-to-one ratio of CBD to THC.

Medical marijuana is believed to ease nausea, pain, loss of appetite, insomnia, and neuropathy related to cancer and cancer treatment. The catch: Not many doctors know how to "prescribe" it.

“Legal” Marijuana and the Federal Tax Law

A growing number of states have legalized the production and sale of marijuana, either for medical or recreational purposes, or both. However, marijuana remains illegal under federal law. It is classified as a Schedule I drug under the federal Controlled Substances Act [21 U.S.C. Sec. 812], and that distinction can make a big tax difference — for marijuana sellers and buyers.

Marijuana Sellers

There is no question that income from selling marijuana is taxable under federal law. The tax law broadly taxes income “from whatever source derived,” whether that source is legal or illegal [IRC Sec. 61(a); see James v. U.S., 366 U.S. 213 (1961)].

However, while marijuana sellers clearly bear the burden of federal taxation, they won’t necessarily reap the benefits of federal tax law rules.

Code Sec. 280E, enacted in the 1980s, specifically provides that “No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on a trade or business if such trade or business … consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) ….” Thus, while most businesses can deduct all their “ordinary and necessary” expenses, that’s not the case for marijuana businesses.

Marijuana sellers can take write-offs against gross receipts for the cost of goods sold (COGS). The IRS acknowledges that Sec. 280E does not disallow a marijuana business’s adjustments to gross receipts for COGS, but those write-offs are more limited than for other businesses [IRS Chief Counsel Memorandum, 201504011]. Under longstanding rules, direct costs (e.g., purchase costs for a reseller or direct material and labor costs for a producer) are treated as COGS [IRC Sec. 471]. In addition, under current uniform capitalization (UNICAP) rules, COGS also includes certain indirect costs, such as handling expenses and payroll costs. However, those additional write-offs for indirect costs are not allowed for marijuana sellers. According to the IRS, the UNICAP rules, enacted after Code Sec. 280E, did not change the character of indirect expenses from nondeductible to deductible.

Thus, while marijuana sellers can claim COGS write-off for direct expenses, such as the invoice price of marijuana purchased for a reseller, or the costs of seeds or plants for a producer, the tax law currently disallows deduction for a whole host of ordinary and necessary expenses, such as rent, utilities, marketing and wage payments.

On the other hand, marijuana sellers can’t skimp on those expenses. For example, courts have held that an “illegal” marijuana business is still subject to the legal minimum wage and overtime requirements of the federal Fair Labor Standards Act (FLSA) [see, e.g., Kenney v. Herliz TCS, Inc., 284 F. Supp. 1186 (D. CO 2018)]. Moreover, it is clear that marijuana sellers must comply with the federal tax law requirements for withholding and paying payroll taxes, even though the underlying employee wage payments and the associated tax payments are nondeductible for income tax purposes.

Marijuana Buyers

Current federal tax law allows a deduction for unreimbursed medical expenses to the extent the total of such expenses exceeds 10 percent of adjusted gross income [IRC Sec. 231]. As a general rule, a deduction is allowed for the cost of a medicine or drug if the medicine or drug is prescribed by a physician [IRC 213(d)(3)]. However, medical marijuana is a different story.

A revenue ruling dating back to 1997, shortly after California became the first state to legalize medical marijuana, provides that an amount paid to obtain a controlled substance such as marijuana is not a deductible medical expense — even if state law requires and the taxpayer obtains a prescription from a physician [Rev. Rul. 97-9, 1997-1 CB 77].

Under IRS regulations, the term “medicine and drugs” includes only items that are “legally procured” [Treas. Reg. Sec. 1.213-1(e)(2)] — and that means “legally procured” under federal law. In the ruling, the taxpayer’s purchase and use of medical marijuana was permitted under state law. However, notwithstanding state law, the IRS ruled that a controlled substance, such as marijuana, obtained in violation of the federal Controlled Substance Act, is not “legally procured” for purposes of the medical expense deduction rules.

Health Savings and Reimbursement Accounts

Health flexible spending accounts (FSAs), health savings accounts (HSAs), medical savings accounts (MSAs) and employer-sponsored health reimbursement arrangements (HRAs) allow for the payment of qualifying medical expenses with tax-free dollars. However, the definitions of qualifying medical expenses for purposes of these accounts parallel the definition for medical expense deduction purposes. Consequently, the costs of medical marijuana will not qualify for tax-advantaged treatment under these accounts.

Technically, there’s nothing to prevent a taxpayer from paying for medical marijuana with funds in an HSA or MSA (although some accounts use restricted debit cards or credit cards that would prevent such payments). However, amounts used for medical marijuana will be treated as nonqualifying distributions that are subject to tax and a 20 percent penalty [IRC Sec. 220(f); 223(f)].

On the other hand, the rules are different for HRAs and FSAs. Distributions from those types of plans must be restricted to qualifying medical expenses – or the plan will be disqualified [Notice 2002-45, 2002-2 CB 93, Prop. Treas. Reg. Sec. 1.125-5(k) (1)].

Understand the federal tax law for marijuana or cannabis as it applies to the seller, buyer, and tax-advantaged savings accounts.