Medical expenses exceeding 10% of Adjusted Gross Income are deductible on Schedule A of Form 1040. Like other income tax deductions (e.g. mortgage interest, real estate taxes) there’s a public policy basis for inclusion in the Internal Revenue Code.

But what happens when federal and state laws conflict?

More and more states are legalizing marijuana either for recreational or medical purposes. Uncle Sam, however, deems marijuana a Schedule I drug under the Controlled Substances Act of 1970. He’s not about to subsidize (via a tax deduction) the use of an illegal drug even if ruled legal at the state level.

The Supreme Court holds that federal law takes precedence over state law.

Revenue Ruling 97-9 determined that payments for medicinal marijuana are not deductible even if permitted under state law. If applied broadly flexible spending accounts and health savings accounts likely won’t allow for their benefits to apply to medicinal marijuana.