IRS Advisory Council OKs Marijuana-related Businesses For Accountants

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.

Skyrocketing Tax Revenues from Pot in Colorado–Will Texas Take Note?

TEXAS: Will the booming taxes being collected in Colorado from marijuana be enough to turn the heads of Texas lawmakers in favor of legalization, or at least lessening the penalties on pot and allowing for taxation?

 

Retail marijuana sales in Colorado brought in $1.4 million in January, and that number jumped to nearly $1.9 million in March, as the popularity of legal marijuana makes using the drug more legitimate for more people.

 

Colorado analysts say the message is simple–the January taxes weren’t just from faddists who ran out to buy pot as a ‘new toy.’  Legal marijuana use is taking effect across the Centennial State, and Cheyanne Weldon of the Texas Chapter of the National Organization for the Reform of Marijuana Laws says Texas politicians can’t help but take notice.

 

“The way we can control it is through a regulated market,” Weldon said of failed efforts to reduce the use of marijuana by law enforcement.  “We can capitalize not only on marijuana taxes themselves, but on the new industries, and the jobs.”

Washington State Mayors Want Cut Of Pot Tax Revenues

WASHINGTON: Almost 100 mayors from across the state are urging state lawmakers turn over a portion of legal marijuana tax revenues to cities to pay for local law enforcement and other costs arising from the new law.

In a letter sent to Gov. Jay Inslee and legislative leaders, the mayors — including Seattle’s Ed Murray — say that cities will be responsible for enforcing the new pot law and deserve a cut of $190 million in new tax revenues the state expects to collect in the next four years.

The mayors did not ask for a specific amount, but stressed that they needed a share of the taxes to carry out duties from overseeing permitting to policing drugged driving. Sharing some of the tax revenues with cities is a “matter of common sense and fairness,” they said.

Marijuana Farmers Unlikely To See Farm Tax Perks

COLORADO:   Marijuana farmers and agricultural tax breaks are the next wrinkle facing the states that have legal weed as lawmakers debate how to tax the product while it’s growing.

Legislatures in both Colorado and Washington are taking a look at pot farmers this session. [Read more…]

Ireland ‘Ready For Legalization Of Cannabis’

IRELAND: “Ireland is ready for the legalization of cannabis,” according to Roscommon TD Luke Ming Flanagan, who today published his Cannabis Regulation Bill 2013.

Mr Flanagan estimated that the legalization of cannabis could generate up to €300 million through tax revenues and the freeing up of resources. However, he stressed this was an estimate and it was not possible to know for sure what savings might be made. [Read more…]

Colorado Is Asking Taxpayers For $1 Billion To Help Schools

COLORADO: In one poor school district in Colorado’s San Luis Valley, students take classes in a bus garage, using plastic sheeting to keep the diesel fumes at bay. In another, there is no more money to tutor young immigrants struggling to read. And just south of Denver, a district where one in four kindergartners is homeless has cut 10 staff positions and is bracing for another cull. [Read more…]

Florida Economists Debate Potential Economic Impact of Medical Marijuana

FLORIDA: State economists are trying to determine the potential economic impact of medical marijuana in Florida. That’s because there’s currently a petition drive to put an amendment on the 2014 ballot that would allow for some forms of legalized weed.

Debate at the state capital Monday focused on how medical marijuana would be taxed, if at all. Currently prescription drugs aren’t taxed in Florida, but some over-the-counter treatments are. [Read more…]

Florida Economists Debate Potential Economic Impact of Medical Marijuana

FLORIDA: State economists are trying to determine the potential economic impact of medical marijuana in Florida. That’s because there’s currently a petition drive to put an amendment on the 2014 ballot that would allow for some forms of legalized weed.

Debate at the state capital Monday focused on how medical marijuana would be taxed, if at all. Currently prescription drugs aren’t taxed in Florida, but some over-the-counter treatments are. [Read more…]

High Marijuana Taxes Could Derail Legalization Plans

COLORADO: When Congress banned marijuana in 1937, it did so in the guise of taxation, imposing a prohibitive levy on cannabis and created criminal penalties for those who failed to pay it. Marijuana taxes also played a prominent role in what may be the beginning of the end for pot prohibition: the legalization measures that voters in Colorado and Washington approved last fall.
Supporters of Washington’s I-502 and Colorado’s Amendment 64 emphasized the revenue that the government could reap by recognizing cannabis production and distribution as a legitimate business. The tricky part, as officials in both states will soon discover, is balancing the desire for tax revenue against the desire to eliminate the black market created by prohibition. Or as UCLA drug policy expert Mark Kleiman, an adviser to Washington’s marijuana regulators, puts it: “What if we gave a pot legalization party and nobody came?”

The dilemma is especially clear in Washington, where I-502 specified a 25 percent excise tax at three levels: sales between producers and processors, between processors and retailers, and between retailers and consumers. That’s in addition to the standard state sales tax of 8.75 percent.

According to calculations by BOTEC, Kleiman’s consulting firm, these taxes will make the retail cost of cannabis 58 percent higher than it would otherwise be, accounting for 37 percent of the price paid by consumers. One BOTEC projection, based on a production cost of $2 per gram, indicates the after-tax retail price will be $17 per gram, or $482 per ounce. Another projection, based on a production cost of $3 per gram, puts the retail price at $25.50 per gram, or $723 per ounce.

That’s a lot more than pot smokers in Washington currently pay. According to the website Price of Weed, which collects reports from marijuana consumers across the country, the average price for high-quality cannabis in Washington is $239 per ounce.

Some of those purchases may be from medical marijuana dispensaries, which are not explicitly authorized by state law but operate as patient and provider cooperatives. Washington’s medical marijuana rules are relatively permissive, allowing cultivation and possession by patients with a wide variety of conditions, as long as they have a doctor’s recommendation. Dispensaries in Seattle currently charge $250 or so per ounce, and medical marijuana sales remain untaxed under I-502.

In short, BOTEC’s projections indicate that the after-tax price for marijuana sold by state-licensed outlets will be something like two to three times as high as prices charged by black-market dealers or dispensaries. “That’s a big problem,” Kleiman says. “The legal market is going to have a hard time competing with the illegal market, but a particularly hard time competing with the untaxed, unregulated sort-of-legal market.”

Colorado’s constitution, unlike Washington’s, requires separate voter approval for new taxes. The price of legal marijuana in Colorado therefore will depend on the fate of Proposition AA, an initiative on next month’s ballot that would authorize not only the 15 percent excise tax mentioned in Amendment 64 but also a special sales tax of up to 15 percent. That’s on top of the standard state and local sales taxes, which in Denver total 8 percent. Meanwhile, voters in Denver, where most pot stores will be located, will decide whether to approve an additional municipal marijuana tax of up to 15 percent.

Supporters of the marijuana taxes, including Amendment 64 co-author Brian Vicente and the Medical Marijuana Industry Group, argue that they are necessary to fund an effective regulatory system, which in turn will help discourage federal interference. Opponents, led by Rob Corry, a Denver attorney and longtime marijuana activist, argue that excessively high taxes will undermine regulation by preserving the black market. “Over-taxation creates a marijuana market ripe for takeover by the unregulated, untaxed, underground market,” Corry says.

The Proposition AA campaign deems that prospect “unlikely,” saying “the combined taxes on retail marijuana sales will add about 22 percent to the retail cost of marijuana products”—less than half the impact of Washington’s taxes. That estimate does not include local taxes, which could make a big difference given Denver’s important role in the marijuana industry.