if they 1099... they will give you a receipt every time they buy from you.....
Medical don't pay taxes ....most are run as non profits
Not true, unless a non-profit qualifies for tax exempt status they are still liable for sales tax as well as federal and state income tax. Non-profits still pay taxes. Non-profit does not mean non-taxed.
Some collectives 1099 vendors, but volunteers receiving reimbursements from a non-profit are not required to receive one, so most attempt to bypass this requirement by claiming the purchases as reimbursements for donations. This is also done because many interpret the attorney general guidelines that state that monetary exchanges may be made to reasonably cover reimbursements for costs related to cultivation to mean they are only able to offer reimbursements for medicine donated. If the collective were to get audited many of those expenses may not be allowed, because an expense reimbursement does not cover labor, it is a service that should usually require a 1099. I don't see a lot of growers bringing their utility bills to account for expense reimbursements either, and this lack of accounting could screw the collective if the IRS were to audit them.
Nothing in the law states that you cannot pay someone for their labor, just that nobody may profit. Non-profits are allowed to compensate workers, and that's how vendors can appear on paper, as paid labor. Being paid for your labor is not considered profiting, and the nature of the business does not need to be disclosed to the IRS as per our fifth amendment right to not incriminate oneself. Vendors would need to receive a 1099 to guarantee the collective can claim the expense, otherwise the collective may have to pay the tax on their gross receipts.
Also, a collective cannot file a 1099 for you unless they collect your social security number on a form W9. Again, the real issue a collective could face by not filing 1099s is when claiming those expense deductions, even as a cost of good sold(which is still allowed under FITC 280E), having no proof of who was compensated.
Even if a collective is able to bypass the 1099 requirement, not giving receipts or tracking the source of marijuana, poses a legal risk, because it is explicitly written in the California Attorney General's guidelines that a collective should track and record the source of their marijuana to secure it's non-diversion. Not doing so can be grounds for arrest and seizure due to non compliance, even though the guidelines say "should" and not "must", and are presented as "suggestions" for remaining compliant, these guidelines are how law enforcement determines the legality of a collective.
The way most collectives are operating is not in accordance with current state guidelines or the federal tax code. Unfortunately, being in line with current state and tax regulations can be incriminating to oneself. The fifth amendment does give one the privilege, or right, to not incriminate yourself. However, this right does not protect an individual from their tax requirements, so any 1099 filed may legally withhold the nature of the business, but not the amount owed. Many growers form LLCs and claim the income under a tax id number as an agricultural company, or simply state their individual business as being a farm laborer or small farmer, both options enable them to claim expenses related to farming, like utilities and soil. You do not need to incriminate yourself to the federal government in order to remain legal, but you may not last long if you think the IRS will continue to allow massive deductions for expenses you have no way of accounting for. Don't mess with the IRS, they will ruin your life, seriously...
BS
