IRS Advisory Council OKs Marijuana-related Businesses For Accountants

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DISTRICT OF COLUMBIA: On Wednesday the IRS Advisory Council (IRSAC) released a report making a number of observations and recommendations to the Internal Revenue Service and federal policy makers relating to the need for greater latitude and legal protections (under the current federal anti-marijuana laws) for tax professionals who choose to work for clients who are in the cannabis industry.

“With over 20 states allowing medical marijuana and now states beginning to legalize recreational marijuana, this industry needs qualified, ethical professionals to help them fulfill their income tax obligations.” IRSAC concluded, “…tax professionals need reassurance regarding their own roles in giving tax advice to and preparing tax returns for such businesses.”

For more information, please contact Allen St. Pierre, NORML Executive Director, or Erik Altieri, NORML Communications Director, at (202) 483-5500. The applicable section regarding IRSAC’s recommendations to policy makers about changing cannabis laws and customs are found at pages 25-27 of the report @http://www.irs.gov/PUP/taxpros/2014-IRSAC-Full-Report.pdf.

The Federal Government Is Taxing Marijuana Businesses To Death

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DISTRICT OF COLUMBIA:  Voters in four states and Washington, DC, have approved marijuana legalization. But the drug remains illegal under federal law, creating all sorts of legal hurdles that state-legal marijuana businesses have to overcome.

One of those hurdles is federal taxes. Due to a section of the tax code known as 280E, many state-legal marijuana businesses have to pay taxes on their expenses — unlike other legal businesses, which are allowed to deduct them. For some businesses, this can drive their effective tax rates to 70 to 85 percent of their profits, which is enough to force many shops and growers out of business.

“It’s basically a dagger at the throat of the entire legal cannabis industry,” said Steve DeAngelo, co-founder of California-based medical marijuana dispensary Harborside Health Center.

Section 280E was originally passed in 1982 to prevent drug dealers from deducting expenses related to the trafficking of schedule 1 or 2 substances, including marijuana, from their federal taxes. It was in part inspired by a Minneapolis drug dealer who ran up deductions for expenses related to his dealing, including the cost of gas, trips to other cities, and even rent on his apartment, which he classified as his place of business.

 

Marijuana Profits Up In Smoke Under IRS Rules

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COLORADO:  Voters in Oregon, Alaska, and Washington, D.C., will decide Tuesday whether to legalize the sale of recreational marijuana. But any new pot shops that voters approve may not be able to survive a drug war-era tax code that already threatens many businesses in Colorado and Washington state.

Under this tax code the federal government stands to make more money from the sale of marijuana than those legally selling it. And that could be enough to shut down many shops.

“It’s almost like they want us to fail,” said Mitch Woolhiser, while walking through his store called Northern Lights Cannabis Co. in Edgewater, Colo. “Everything I do is aimed at keeping us in business because if I don’t, then (the feds) win. And I’m not going to let them win.”

Woolhiser believes the federal government is actively seeking to undermine his business.

 

Despite Legal Marijuana Rules In 20 States Feds Won't Play Ball

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WASHINGTON: Washington State has set rules for retail production and sale of marijuana. The State Liquor Control Board sealed the deal in less than an hour, unanimously approving regulations covering production, processing and retailing. Land is allocated, 40 metric tons of production is allowed annually, and even marijuana-infused products are monitored in solid, extract and liquid form. See Washington State Sets Pot-Sales Rules. [Read more…]