A federal appeals court on Tuesday again upheld the U.S. Internal Revenue Service's authority to audit state-licensed marijuana dispensaries, rejecting a New Mexico outlet's argument that the tax agency is acting as a surrogate for criminal prosecutors.

The U.S. Court of Appeals for the Tenth Circuit affirmed two district court rulings refusing High Desert Relief Inc.'s request to quash IRS summonses seeking records from the dispensary's banks, its local utility and New Mexico's medical marijuana regulator. A unanimous three-judge panel found the tax agency acted in good faith in pursuing audits of High Desert Relief's 2014 and 2015 tax filings.

High Desert Relief, or HDR, “fails to present any evidence that the IRS has operated with criminal prosecution in mind,” Judge Jerome Holmes wrote for the unanimous three-judge panel. “For one … the IRS had not referred the matter to the DOJ for prosecution under the [Controlled Substances Act]. For another, there is no plausible reading of the record that would indicate that HDR had in fact been investigated, charged, or prosecuted criminally under the CSA for business activities stemming from fiscal year 2014 or 2015.”