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Lawmakers Press Treasury Department On Marijuana Tax Fairness
A pair of Congressional Democrats are asking the Treasury Department to reinterpret a federal law they say results in marijuana businesses being taxed at an unfair rate.
</header> Under Section 280E of the Internal Revenue Code, cannabis businesses aren’t able to write off normal operating expenses such as rent, utilities and payroll from their taxes. The provision applies to anyone who sells Schedule I or Schedule II drugs, and was enacted in 1982 after a drug dealer claimed his yacht and weapons purchases as business expenses on his taxes.
“Congress did not envision its future application to marijuana businesses caught in between state and federal laws,” Reps. Earl Bluemauer (OR) and Barbara Lee (CA) wrote in a letter to Treasury Secretary Jacob Lew on Friday. “Yet…marijuana dispensaries operating in accordance with state law in 24 states are subject to this provision, and to significantly higher tax rates than other businesses, threatening their financial viability.”
The inability to make usual deductions and take advantage of other credits available to other businesses often leads to marijuana producers and sellers paying an effective tax rate between 65-75 percent, compared with other companies that pay about 15-30 percent.
“Attitudes toward cannabis are rapidly changing, and more and more states are moving toward legalization of both medical and adult use,” the lawmakers wrote. “Attitudes in the federal government are shifting as well,” they noted, citing the fact that over the past two years Congress has enacted amendments preventing the Justice Department from spending money to interfere with the implementation of state medical marijuana laws.
Blumenauer is sponsoring House legislation to change federal law and overturn the penalty’s application to state-legal marijuana businesses. It currently has 17 co-sponsors, and a companion bill has four senators signed on. Neither piece of legislation has been scheduled for a hearing or vote.
In the meantime, the two House Democrats are asking the Obama administration to take a narrower interpretation of the existing law.
“While the prohibition in § 280E has been broadly applied to date, an interpretation more in line with public opinion and the policy developments in Congress would tailor a narrower application of the rule, exempting legitimate state legal businesses,” they wrote to Lew.
Lawmakers Press Treasury Department On Marijuana Tax Fairness
A pair of Congressional Democrats are asking the Treasury Department to reinterpret a federal law they say results in marijuana businesses being taxed at an unfair rate.
</header> Under Section 280E of the Internal Revenue Code, cannabis businesses aren’t able to write off normal operating expenses such as rent, utilities and payroll from their taxes. The provision applies to anyone who sells Schedule I or Schedule II drugs, and was enacted in 1982 after a drug dealer claimed his yacht and weapons purchases as business expenses on his taxes.
“Congress did not envision its future application to marijuana businesses caught in between state and federal laws,” Reps. Earl Bluemauer (OR) and Barbara Lee (CA) wrote in a letter to Treasury Secretary Jacob Lew on Friday. “Yet…marijuana dispensaries operating in accordance with state law in 24 states are subject to this provision, and to significantly higher tax rates than other businesses, threatening their financial viability.”
The inability to make usual deductions and take advantage of other credits available to other businesses often leads to marijuana producers and sellers paying an effective tax rate between 65-75 percent, compared with other companies that pay about 15-30 percent.
“Attitudes toward cannabis are rapidly changing, and more and more states are moving toward legalization of both medical and adult use,” the lawmakers wrote. “Attitudes in the federal government are shifting as well,” they noted, citing the fact that over the past two years Congress has enacted amendments preventing the Justice Department from spending money to interfere with the implementation of state medical marijuana laws.
Blumenauer is sponsoring House legislation to change federal law and overturn the penalty’s application to state-legal marijuana businesses. It currently has 17 co-sponsors, and a companion bill has four senators signed on. Neither piece of legislation has been scheduled for a hearing or vote.
In the meantime, the two House Democrats are asking the Obama administration to take a narrower interpretation of the existing law.
“While the prohibition in § 280E has been broadly applied to date, an interpretation more in line with public opinion and the policy developments in Congress would tailor a narrower application of the rule, exempting legitimate state legal businesses,” they wrote to Lew.
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