Americans for Tax Reform, one of the largest conservative groups in the country, has sent a letter to lawmakers urging a change in federal tax laws in regards to marijuana.
Congressman Curbelo (R-Fla.) and Congressman Blumenauer (R-Ore.) have introduced House Resolution 1810, the Small Business Tax Equity Act of 2017, which would remove the inequities in the tax code that are biased against state-legal marijuana businesses claiming tax credits or deductions. Section 280E of the tax code prevents businesses with expenditures connected to illegal drug sales from utilizing deductions or tax credits.
However, in 28 states, D.C., and Guam, marijuana businesses are not considered illegal, yet are unfairly discriminated against by Section 280E. Because of this, marijuana businesses nationwide face income tax rates as high as 90%. This bill will remove marijuana businesses from the arbitrary measures of Section 280E and entitle them to the same deductions and credits any other legal business has. Americans for Tax Reform (ATR) has urged support for this bill. Below is the full letter they sent from ATR president Grover G. Norquist to Representatives Curbelo and Blumenauer:
Dear Congressman Curbelo and Congressman Blumenauer,
I write in support of H.R. 1810, the Small Business Tax Equity Act of 2017, legislation which allows legal marijuana dispensaries to take common necessary business deductions under the tax code.
Under 280E of the tax code, marijuana businesses that are operating legally under state law in 28 states, D.C., and Guam are not allowed to deduct necessary business expenses like wages, equipment, and rent from taxable income.
This law was originally created in 1982 to stop drug dealers from taking tax credits and deductions. Today, it is hitting legal businesses across the country resulting in federal income tax rates close to 90 percent.
The Small Business Tax Equity Act addresses this with a simple and commonsense change – amending federal law so that Section 280E does not apply to legal businesses.
The fact is, marijuana businesses that are operating legally should be entitled to the same deductions and credits under the tax code as any other business. Passage of the Small Business Tax Equity Act will remove the arbitrary and punitive measures of the tax code that treat legal marijuana businesses as illegal. All members of Congress should have no hesitation supporting and co-sponsoring this important legislation.
Grover G. Norquist
President, Americans for Tax Reform