or... my new all time favorite, the IRS will disallow all standard business deductions because the business is illegal. What business can long exist without those deductions. Beyond that are the zoning and business licenses. I retained a lawyer a while back in order to try to get a business license for a dispensary. The lawyer was thrilled. He said no business licenses for the production or sale of marijuana had ever been issued. Further he thought we had a loophole that could be fought. An apparal vendor need not describe the sorts of clothing it intended to dispense, that "casual women's clothing" is enough, so "plants and healing herbs" should be enough for any license and yet as many times as it had been tried, it was turned down for a lack of specificity. He laid out the plan whereby we would exhaust every legitimate avenue and then begin litigation, estimating that the entire campaign couldn't cost more than about $50,000 dollars. And this just to get a license that ordinarly costs a few hundred dollars. He wanted to be a marijuana legal pioneer with my money.
There are certain municipalities that go by a list of business categories with codes corresponding to each category (I had run afoul of this list before with another endeavor). You can't have a business unless it is already listed and coded. He said we could simply petition the municipality to include marijuana dispensory and that might only cost $20,000, far less if I knew anyone with influence in the city. If we include DOJ pressure on local government officials in the form of threatening letters, that $20k might spiral with absolutely no chance of sucess.
There is, or was, a local group of dispensaries that has recently been shut down, the federal reason was that those dispensaries did not abide by local ordinance. I have never heard of the Feds enforcing local laws. The fact was that the owner continued his business (at a profit) for two years while still paying a $1000 a day fine for not having a proper business license.