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Marijuana Stocks & Businesses Are Slacking on Their Taxes Congress Taking Notice

Marijuana Stocks / Cannabis industry was given some legislative salvation on taxes by members of Congress. The Small Business Tax Equity Act of 2017, introduced in the House by Representatives Carlos Curbelo (R-FL) and Earl Blumenauer (D-OR) and in the Senate by Senators Ron Wyden (D-OR), Rand Paul (R-KY), and Michael Bennet (D-CO), would allow state-legal marijuana businesses to take normal business deductions like any other legal business. The tax code provision, 280E, prevents marijuana businesses from taking regular business deductions related to sales.

Tax Code 280E came to life during the Reagan years when a convicted cocaine trafficker wanted to take a tax deduction for his illicit business. The idea was rejected by Congress and 280E was designed to keep other drug dealers from doing the same thing. The code says that a person can not take a business deduction if that business trades in a controlled substance.

Because marijuana is classified as a Schedule 1 controlled substance, marijuana companies have been unable to take the standard deductions that most companies take for granted. National Cannabis Industry Association (NCIA) executive director Aaron Smith stated, “Cannabis businesses aren’t asking for tax breaks or special treatment. They are just asking to be taxed like any other legitimate business. NCIA and its members appreciate this strong support for a fair approach, and we’re especially proud to newly gain that support from Representative Curbelo.”

If you aren’t a business owner you may not realize that this is typically how profits are calculated. They start with gross income, subtract expenses to determine taxable income, and then pay taxes on this final amount. Since marijuana companies cannot deduct expenses, they pay taxes on the higher amount, which can sometimes be 70 percent or more, according to NCIA.

Smith stated, “State-legal cannabis businesses have added tens of thousands of jobs, supplanted criminal markets, and generated tens of millions in new tax revenue. States are clearly realizing the benefits of regulating marijuana and we are glad to see a growing number of federal policy makers are taking notice.”

Co-founder of cannabis edible company Zoots said, Dan Devlin said, “Our industry contributes to local communities just like any other sector, and it’s estimated the legal marijuana industry will contribute $730 million in tax revenue to Washington alone in 2018-2019. However, current tax codes place legal marijuana businesses at a disadvantage to succeed and make profits because we’re not permitted to deduct standard businesses expenses from our federal taxes. It’s important we are taxed fairly and this legislation could have a huge impact on the industry’s potential to grow and prosper.”

By J. Phillip

Coming from Miami FL, Jonathan Phillip or (J. Phillip) is a social media marketer and currently head of PR and social media management for MarijuanaStocks.com. When working with clients in various sectors Jonathan will use his expertise and knowledge to make sure the correct audience is viewing and engaging with your content product or service. Jonathan is a self-taught marketer and entrepreneur learning from the best and sharpening his skills with each project.

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