BY: MATTHEW CRISCIONE, GROWER REP @ OREGON’S FINEST
Let’s say your dream came true, and you have suddenly found yourself in the middle of a successful business. For example, say your business grossed 1.7 million dollars before expenses. Then, suddenly, your accountant claims your business owes $866,000 in taxes alone. For most dispensary owners, this bombshell is not an uncommon one.
As of May 2016, the State of Oregon alone has taken in $10.5 million in taxes for the first quarter. This was significantly higher than the projected $3 million they were originally expecting. With all that money coming in you would think that owning a dispensary would be a cakewalk. In reality, nothing could be further from the truth. As seen in this video here,
dispensaries have huge hurdles to jump over at the state level, and it gets exponentially worse as you move to the national tax arena. In short, the Federal Government is taxing legal, licensed businesses out of existence.
Here is the text of 26 U.S.C. § 280E, “Expenditures in connection with the illegal sale of drugs:
No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.”
Although this provision was not necessarily intended towards the legal cannabis industry
because of the disparity between current state and federal laws, innocent and legitimate shop owners are being forced to pay some of the highest taxes in modern economic history. Being cut off from the banking industry forces businesses to deal dangerously with cash.
It is very clear that we need to address the inequality that the current tax code currently has. The Federal Government needs to expedite the Marijuana Businesses Access to Banking Act, that Senator Ron Wyden, Jeff Merkley and Representative Earl Blumenauer introduced earlier this year. We need a serious and fair look at rescheduling (no we’re not handing the industry over to you Mr. Big Pharma, so back the hell off!). At the very least we need a National Medical Cannabis Program. I think NMCP has a nice ring to it!