The taxpayer operated a medical marijuana dispensary (The Vapor Room) in San Francisco that purchased inventory from licensed medical marijuana suppliers and sold the product to customers. The customers could use the Vapor Room’s vaporizers on-site, sample inventory, and participate in other services. A deduction is denied for ordinary and necessary businesses incurred in a trade or business of trafficking controlled substances prohibited by Federal law or the law of any State in which the business is conducted (IRC Sec. 280E). Although the use and sale of medical marijuana (a controlled substance) are legal under California state law, it is prohibited under federal law. The Tax Court determined, and the Ninth Circuit recently affirmed, the ordinary and necessary businesses expenses associated with operating the Vapor Room were not deductible. [ Editor’s Note: IRC Sec. 280E disallows a deduction only for the expenses of a business and not for its costs of goods sold.] Martin Olive, 116 AFTR 2d 2015-XXXX (CA 9, 2015).