Attorneys for the IRS are defending the agency’s authority to block marijuana companies’ tax deductions, calling a Colorado dispensary’s “fevered assertions” to the contrary “scaremongering.”

The U.S. Department of Justice’s Tax Division on Friday urged the U.S. Court of Appeals for the Tenth Circuit not to disturb a panel ruling that said the IRS has broad investigatory powers to determine whether owners of a state-legal marijuana dispensary improperly deducted business expenses from their federal tax returns.