marijuana taxes tax
Marijuana Business News

Federal Politicians Announce Commonsense Tax Reform For Legal Marijuana Businesses

marijuana taxes tax
(via dailyfinance.com)

Today, Representative Earl Blumenauer (D-OR-03) and Senator Ron Wyden (D-OR) announced plans to introduce bicameral legislation next week that would reconcile state marijuana laws and federal tax law. The Small Business Tax Equity Act, which was introduced last Congress by Congressman Blumenauer, would create an exception to Internal Revenue Code Section 280E to allow marijuana businesses operating in compliance with state law to take deductions associated with the sale of marijuana like any other legal business.
“More than two-thirds of Americans now live in jurisdictions that have legalized either the medical or adult use of marijuana. It’s time for the federal government to catch up,” said Congressman Blumenauer. “Section 280E creates an unequal and unrealistic tax burden on these businesses. I’m excited to work with Senator Wyden in introducing the Small Business Tax Equity Act, which would bring much needed fairness and level the playing field for small businesses that follow state laws and create jobs.”

“Our legislation would provide an overdue update to federal tax law, which has not caught up to the fact that it’s 2015 and Oregonians have voted both to legalize medical marijuana and to regulate marijuana for recreational use,” Senator Wyden said. “This is a question of standing up for the people of Oregon, and ensuring that the federal government respects the decision Oregonians have made at the ballot box.”

Twenty-three states, the District of Columbia and Guam have passed laws allowing for the legal use of medical marijuana. An additional 12 states have passed laws allowing the use of low-THC forms of marijuana to treat certain medical conditions. In many of these jurisdictions, patients can access medicine safely through state-regulated dispensaries.

The federal tax code, however, prohibits anyone selling Schedule I or Schedule II substances from deducting business expenses associated with the sale of marijuana from their taxes. Marijuana is a Schedule I substance. Therefore, even businesses operating in compliance with state law are not allowed to deduct the common expenses of running a small business, such as rent, most utilities and payroll. They cannot claim the Work Opportunity Tax Credit if they hire a veteran, and they are limited in lawful deductions relating to construction or operation costs if they want to remodel a building for their retail operations.

In certain circumstances, legal marijuana businesses can pay federal income tax rates at nearly 90 percent, while the U.S. Small Business Administration estimates that many small businesses pay an effective rate of around 20 percent.

“Congress never intended to impose a gross receipts tax – and that’s pretty much what we have here – on legal business owners decades in the future,” said Grover Norquist, President of Americans for Tax Reform. “The intent of the law was to go after criminals, not law abiding job creators. Congress needs to step up and clarify that this provision has become a case study in unintended consequences.”

“The small businesses that make up the legal cannabis industry are working overtime to be responsible, contributing members of their communities,” said Aaron Smith, Executive Director of the National Cannabis Industry Association. “So it’s particularly outrageous that when they to do the right thing by paying their federal taxes, they end up penalized with double and triple tax rates. Instead of being able to create more jobs, increase salaries, or add benefits for their employees, these businesses are being forced to send more than two-thirds of their profits straight to the federal government. Rep. Blumenauer and Sen. Wyden are standing up for fairness and support for small business – something everyone should applaud. We certainly do.”

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  • Bongstar420

    The states with CBD only could get supplied pretty easy through the mail with rules like this…we already don’t have anywhere near the CBD consumption we should if medical really were medical. CBD shortages are caused by the fact that THC sales fund its existence due to all the market restrictions involved vs peoples desire to either have less suffering or less suffering plus a high.

    • Nathaniel

      Yeap. This is on point. CBD, CBC, CBN, and more have real medicinal value and THC is the fun. THC offers some relief but little compared to the other cannabinoids.
      Folks just like to get high, which I have nothing against [I am a fan of many substances that god/goddess/earth/whatever makes], but the driver of the medicinal bus has always been the fun and not really the medicine.

      • newageblues

        Does low THC high CBD cannabis help with promoting appetite when that is needed because of chemotherapy? Or is it the euphoria or other psychoactive effects from THC that give people more appetite?

        • HeyJah

          Higher CBD strains, those couch-lock strains mostly, tend to stimulate the appetite more. High THC and THCV strains tend to diminish interest in food. That’s my experience.

        • Nathaniel

          Here is some clarification of an earlier statement.
          High THC strains are great for those who suffer from depression [in all its forms], as they tend to increase energy, and that is most certainly a medicinal use. I was speaking in general terms, isolating certain cannabinoids, because THC in specific has been the driving force for most of the markets, recreational or medicinal. The rest of the cannabinoids are not as readily touted, because they do little in the way of boosting the “high” most enjoy.
          Take a look at any strain finder and you will see the THC to any-other-cannabinoid ratios are drastically out of proportion. This has more to do with growers desire to produce a product folks will purchase than it does to do with the desire to create better medicine. It is just good business on the producers part. If you want to make money, grow a medicine folks enjoy consuming/using.
          HeyJah is right regarding whole plant consumption efficacy to assist in alleviating whatever ailments a person might be using it for. There is evidence isolation of THC [marinol] is not nearly as medicinally effective as when someone uses the whole plant
          However, my contention is usage of a more balanced cannabinoid ratio strain might yield more overall powerful medicinal results.
          And like I said previously, I have no qualms about any getting high, I just like honestly framed discussions about medicinal consumption.

      • HeyJah

        It’s interesting to note the many shades of “fun” different strains exhibit. It’s not just the cannabinoids – terpenes, chlorophylls, and god knows what else, are contributing to a unique medicinal expression. Organic whole flowers, treated with respect, are where it’s at.

      • lovingc

        That is not what I have been reading. Thc is only one component ,the whole plant is what is needed. Trying to pick one cannabinoid to get something done doesn’t work for everyone.

    • Mary Miller

      Bonstar420, The so called CBD only does NOT help everyone with medical need, nor was CBD intended to be THE ONLY medical cannabis!!! And it’s a gross misunderstanding by those who know nothing about Cannabis (read: those who are in charge of the bills and regulation). CBD shortages, really mean nothing because CBD is found in almost every strain of cannabis there is, except those that have had it bred out of the strain. CBD’s are excellent for children with severe seizure disorders, and good for spasticity, but without using the WHOLE plant, CBD alone does not stop all seizure activity (as found by older Dravet’s Children), nor does it effect all spasticity, it needs to be paired with THC. For some, THC is very necessary for pain relief, not to mention to help activate the cues for sleep; if you take that away, most people with chronic pain may not sleep at all.

  • Mary Miller

    now the other shoe has dropped about why he was fired: I don’t think he was in favor of taxation, just saying that this all fits together all too well….

    • anne_48503

      Who was fired; Sen. Wyden or the other guy??

      • Mary Miller

        The Cannabis director for Oregon was fired. Not Sen. Wyden or any other senator. that doesn’t seem to happen, they are voted in and would have to be voted or impeached out. But the director of the Cannabis Control, Tom Burns.

      • Mary Miller

        the other guy, Tom Burns. The ONLY one with Cannabis background, sorry, just got this from Diqus.

  • anne_48503

    I agree with Mary Miller. CBD is great but THC does a lot of good. It’s not ‘just for fun’… it feeds your spirit; it’s soul food.

    It also is great for pain relief and inflammation. I do not know how to separate the plant so I know it is perfect the way it is made. DO NOT FIX WHAT ISN’T BROKEN… THC and CBD’s are part of a whole perfect food for a human body. It is only called a drug (not because of the high) because they do not want us to partake and heal ourselves.

    I personally use it for pain topically and if I were to ingest it I am sure it would get me high but that is not what I use it topically for. It takes away the pain for my arthritis. Without it I could not work or be a productive part of my life or community. My arm would be useless. I thank God for the benefits because my dad was on death’s door with diabetes being completely out of control. He is curing it with cannabis infused coconut oil. Which coconut in of itself is a great healing superfood for those who cannot ‘legally’ get cannabis. Coconut oil helps lose weight and a great antibiotic for cuts and great for skin; for so many uses. Everyone should be getting coconut in their bodies daily too along with cannabis we may have a longevity of life. I know my dad has surpassed his death date and he has only smoked a joint once or twice in his life but that was when he first started getting his med card. He can’t smoke it because he is to old for the coughing. His body can’t take it but he takes capsules of the soaked in coconut oil cannabis ground up into capsules at night. He has lost 100 lb. and maintains his sugar daily levels. His numbers have been cut in half. He has also reduced insulin intake; where before he was running out every month with readings in the 400 and 500’s with insulin.

    There is much more to this story but my point is the plant is perfect the way it is as a superfood for humanity. The ones calling this plant a drug and keeping this plant as ‘an illegal substance’ is the ones who have worry for their profits. The only reason it is a ‘drug’ (with nutrients) is because it will hurt big business bottom line. The gigantic health care industry doesn’t make money off curing people or off healthy people. They need us continuously sick. They poison our food our air and our water… and starve us of nutrients that we need and which is inside of cannabis that will keep us healthy. Prisons is another big business keeping this plant as an illegal substance. Drugs do not have nutritional value; NONE do. This is how we know the plant is a food NOT a drug at all.

    • JWaltz

      I know what u mean about “soul food.” I have a soul-killing job at a call center and sometimes I can’t put it aside when I get home, but weed allows me to FORGET my troubles if only for a few hours. It’s medicine for your soul as well as your body.

      • anne_48503

        We have a cannabinoid receptors in our bodies. There are only 2 places cannabinoids can be found on earth… human breast milk and the cannabis plant. The only two places ON EARTH. It’s impossible for you to overdose on cannabis because it acts differently than almost all other foods or drugs do which run on the respiratory system, which can fail if too much of almost anything gets within the body goes through. The Cannabinoid receptors are completely separated from this system in the body making it so the respiratory system is not affected which is the cause of OD’s.

        It for sure feeds the soul… and without it our spirits are starved of all we need to know. Feed thy spirit :)

    • HeyJah

      anne_48503 – I love it when you talk dirty like that! Will you marry me?

      • anne_48503

        :) I really hate to inform you; since your proposal was so sweet, I am married for the past 21 years… thanks to cannabis in part haha

  • Sinclair

    This isn’t about getting high since I haven’t smoked in 10 years. Saying this the whole bud is more therapeutic than in separate forms.

  • Cyndysub

    “announced plans to introduce bicameral legislation next week”
    OOOOhhh I’ll break out the champagne. :)

  • MrPC

    My head is about to explode! I read a quote from Grover Norquist that didn’t make me gag!