Legislation to Reform Tax Laws for Cannabis Businesses Filed in U.S. House and Senate

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Legislation to Reform Tax Laws for Cannabis Businesses Filed in U.S. House and Senate

U.S. Representative Earl Blumenauer (D-OR) and Senator Ron Wyden (D-OR) have introduced the Small Business Tax Equity Actphotocredithuffingtonpost of 2015 in both the House and the Senate. The bill would end unfair taxation issues faced by legal, state-sanctioned cannabis businesses by altering Section 280E of the federal tax code.

“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 (NCIA). “So it’s particularly outrageous that when they try to do the right thing by paying their federal taxes, they end up penalized with double and triple tax rates.”

According to NCIA; “The 280E provision was added to the tax code in the 1980s after a convicted cocaine trafficker asserted his right to deduct business expenses from his federal tax filings. The provision was never intended to penalize cannabis businesses operating legally and in compliance state law. However, because it applies to the sale of Schedule I and Schedule II substances under the Controlled Substances Act, cannabis cultivators and dispensaries are prohibited from deducting the common expenses every other legitimate business can deduct, including rent, payroll, and state excise taxes. The result is effective tax rates that can range from 50 to 85%, absolutely crippling for a small business.”

NCIA released a white paper today providing real-world examples of how 280E harms small businesses across the country, which can be found by clicking here.

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“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,” said Smith.

The Small Business Tax Equity Act – S. 987 and H.R. 1855 – would create an exception to Section 280E which would allow legal cannabis businesses in compliance with state law to take normal business expense deductions like any other legal business. S. 987 has been co-sponsored by Sen. Jeff Merkley (D-OR) and Sen. Michael Bennet (D-CO). H.R. 1855 has been co-sponsored by Reps. Dana Rohrabacher (R-CA), Adam Smith (D-WA), Richard Hanna (R-NY), Jared Polis (D-CO), and Don Young (R-AK).

“Rep. Blumenauer, Sen. Wyden, and their co-sponsors are standing up for fairness and support for small business – something everyone should applaud,” says Smith. “We certainly do.”


1 Comment

  • Lynn Cowl
    May 23, 2018

    The whole cannabis industry needs to have a TOTAL review and this industry needs to
    be removed from the Controlled Substance Act. When you going online and read what
    the medical advantages are to be gotten by people who elect to use cannabis, to me
    it is a slam dunk winner. With the lastest national poll taken with 63% of the population
    of this country saying they FAVOR legalization of weed, why isn’t our members
    of both houses listening to what the people are saying. The revenue that can be
    generated by the complete 100% legalization of all the states that want this, can
    for sure help all the people of these states, with the education, health, law
    enforcement, and etc parts of their state governments with the taxes on this
    market, and NOT the outragous tax base on this commodity noted in the
    Controlled Substance Act, which is for sure counter productive to any growth
    for any company. Let each state decide how they want to address this issue.
    For way to long to this country, the whole issue of the use of MARAQUANA has
    been looked upon as bad but in fact this is the not the case. Sure hope this
    can be changed if the members of our government can in fact see the
    light on this matter, that has remained in the dark in this country for
    way to lon

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