‘A whole lot of pain’: Legal marijuana industry prepares for tax day buzzkill

Now this is ridiculous.

Source

WASHINGTON — For owners of marijuana businesses, April 15 is one big downer.

While most business owners rush to meet the federal tax deadline and cash in on a plethora of deductions, pot store owners and growers complain that they can't write off a single expense, even if they have state licenses.

So, sure run your little business, make your profits, but we'll take it from you come tax time.

The ban on deductions by the Internal Revenue Service is in place for one reason: Congress has declared every pot transaction a felony.

Can't deduct a felony I guess...

And on top of that, the reasoning is more of this BS, save the children garbage.

Getting the law changed will be difficult, with legalization opponents arguing that it would be a mistake to give the pot industry any tax breaks.

"Like any special interest group, they're after one thing: more money. . . . It's particularly audacious to demand that the government allow you to deduct expenses when you're breaking federal law," said Kevin Sabet, president of the anti-legalization group Smart Approaches to Marijuana.

Derek Franklin, president of the Washington Association for Substance Abuse and Violence Prevention, said giving a tax break to marijuana businesses would only lower the price of the drug, making it easier to acquire. The idea "doesn't make sense from a public health perspective," and marijuana businesses should pay more to curb pot use among minors, he said.

Many pot store owners say high tax rates make it hard to enter the industry and to compete with underground drug dealers.

"If someone spends $100 in our store, $77 of it is going to some form of tax — that's federal, state, sales, whatever," said Tim Thompson, co-owner of a pot shop called Altitude in Prosser, Wash. "There's a lot of people staying out of the recreational market because the black market is cheaper, and the reason is because of these taxes and lack of write-offs."

And as with everything the government puts their hands on, they help ruin it one step at a time. Does the gov or industry professionals think business owners are LYING when they tell you how the black market can still thrive even with legal businesses?

So 77% state and fed tax on this item, plus no ability to write off any of your expenses?

We aren't helping curb the dangerous parts of drug use with that. We are only encouraging the black market to flourish.

a reply to: tothetenthpower

I always said I was for it being legal, but I also stated to tax the hell out of it. That's going a tad overboard there, I meant to tax it much in the same way as cigarettes or smokeless tobacco is, maybe just a tad higher but not at 77%!!!...

a reply to: tothetenthpower

does not compute :

why cannot a pot business write off such things as :

furniture

office equipment

vehicles

hydroponic kit

ect etc etc etc

like any other business ???

none of the tranasactions to aquire any of the assets i cite are felonies

so WTF ??????????????????

a reply to: ignorant_ape

I was thinking much the same thing IA.

Don't claim tax expenses on the Pot per se, but claim on all the other connected, but easily 'unconnected' things required to run a Pot business instead...claim it as incidentals for your 'horticultural' business or somesuch.

originally posted by: MysterX
a reply to: ignorant_ape

I was thinking much the same thing IA.

Don't claim tax expenses on the Pot per se, but claim on all the other connected, but easily 'unconnected' things required to run a Pot business instead...claim it as incidentals for your 'horticultural' business or somesuch.

Can't.

The IRS looks at what you DO for business. Grow operation, therefore ALL your profits and expenses are considered to have come from felony activity.

So you can't claim anything.

~Tenth

Saying that a legal market will remove contraband is stupid, when taxes are a big chunk of the final price black market always thrive.

Just look at tobacco, always legal and always a huge black market due to taxes

Inside New York City's Dangerous, Multimillion-Dollar Cigarette Black Market

Same with booze, its just a risk/reward thing, big taxes makes room for big rewards , still some people would prefer to obtain their stuff the legal way if there is the opportunity, so a legal market no matter how much more it cost will reduce the black market share, if you don't believe me google something called netflix and you will see that despite having all that they could encounter there in a torrent place, some people pay to watch tv on internet, crazy i know, some people like to live by the law

What did you expect people, did you think you will join society and not contribute to it?

originally posted by: ArchangelOger
a reply to: tothetenthpower

I always said I was for it being legal, but I also stated to tax the hell out of it. That's going a tad overboard there, I meant to tax it much in the same way as cigarettes or smokeless tobacco is, maybe just a tad higher but not at 77%!!!...

I do not understand your train of thought or others with your same opinion.

"Make it legal, but tax the hell out of it!"

How come 'things' are only ok to do if the Feds make money off of it? If marijuana is dangerous or unhealthy, how does paying the federal government make it better/ok?

If it is so harmful that it needs to be outlawed, then how does paying more make it less harmful? If it isn't harmful, then why the hell do the feds need to make extra money off of it?

I don't care either way tbh.. I still won't smoke it. However all of the people rallying to have weed legalized by giving the government a concession is sickening!

Fight for your rights! Quit asking for them or trying to purchase them. The entire "weeds it is ok, but it needs to be taxed" crowd is nothing but a herd of sheep.

Weed is good or it's bad. It should be legal or illegal. Such determinations should not be decided based on profits, but rather facts and the will of the people.

a reply to: tothetenthpower

Wouldn't the IRS accepting a tax payment for Pot related business be a felony as well? These idiots have been talking out of both sides of their mouths for so long, they don't even listen to themselves.

a reply to: doompornjunkie

You're not being realistic. There is no situation in the real world where cannabis will be legal, untaxed. The government would never allow it. If it's taxed, they're at least liable to grudgingly accept it. It's a pragmatic approach, but I think you're being a bit too far gone to label those who would accept legalization and regulation as 'sheep.' Oh, how I hate that term when applied to people who just happen to think differently on a certain subject. Why do you feel that you need to dehumanize somebody on the other side of an issue?

I'm a longtime proponent of cannabis law reform. Prohibition is as stupid as it is immoral. When the day comes, I'll gladly and proudly pay for taxed cannabis from a licensed dispensary. Until that time, my buddy who lives down the road will continue to receive my custom.

a reply to: Monger

Your post is exactly why I refer to the "its ok, as long as it's taxed" crowd as sheep.

You're not being realistic. There is no situation in the real world where cannabis will be legal, untaxed. The government would never allow it.

Guess what. It was supposed to be a government BY THE PEOPLE FOR THE PEOPLE. By accepting that they wont listen to you unless you pay them makes you a sheep. Your post did nothing except prove my point!

Again. Quit offering to pay in order to exercise your rights.

Also... please quit being so ignorantly melodramatic about the term 'sheep'. Given that and your stance on how the feds own you, i'm probably wasting my time, but still... stop.

ETA: Since this debate about weed first started, it has always bothered me that in order for it to be legal, citizens should pay more... that's what it boils down to. It's a disgrace to our four fathers, our Constitution, and to our integrity as Americans.

originally posted by: network dude
a reply to: tothetenthpower

Wouldn't the IRS accepting a tax payment for Pot related business be a felony as well? These idiots have been talking out of both sides of their mouths for so long, they don't even listen to themselves.

Exactly!
WTF?
And as for talking out of both sides of their mouths.......................... no its not a mouth they talk out of!
Bit further south.

So the Govt expects to profit from it despite calling it a felony.

Doesn't that make them an accessory to and profiting from the proceeds of crime.

They'll have to arrest themselves in that case.

a reply to: HumansEh

Nope.. uncle scam has long profited from the drug trade .. everywhere from the golden triangle to afghanistan .. uncle scam hates competition .. hence the reluctance to legalize it and the not allowing tax deductions for businesses in areas where its legal ..

a reply to: doompornjunkie

Taxing MJ sales is actually the only way to make it a sensible, large scale industry.

The whole idea was to use the profits to help states bridge the gab between revenue and the ever dwindling amount being given out by the Fed for infrastructure, education etc.

And considering a pound of pot can be made, at very high quality for about 10$, it only makes sense that they would tax it, at a high rate in order to push money back to the state coffers. Now 77% is obviously a bit much, but 30 isn't out of the realm of understanding in the first 5 or 10 years of the program.

The issue is that without tax incentives for business owners, it's more than likely allowing the black market to continue to flourish.

~Tenth

a reply to: HumansEh

I think they have already covered the angle with the taxation on "ALL income" including illegal.

Abolish the irs. This is supposed to be our gov.

This tax rate is a reason I will never get into the industry.

It is almost like they are just using it to root out the growers.

Here, get on this DEA list and we will extort you. Thanks

originally posted by: tothetenthpower
a reply to: doompornjunkie

Taxing MJ sales is actually the only way to make it a sensible, large scale industry.

The whole idea was to use the profits to help states bridge the gab between revenue and the ever dwindling amount being given out by the Fed for infrastructure, education etc.

And considering a pound of pot can be made, at very high quality for about 10$, it only makes sense that they would tax it, at a high rate in order to push money back to the state coffers. Now 77% is obviously a bit much, but 30 isn't out of the realm of understanding in the first 5 or 10 years of the program.

The issue is that without tax incentives for business owners, it's more than likely allowing the black market to continue to flourish.

~Tenth

Your post does nothing at all to refute my point!

Why is it ok only because people have to pay more!!!???
Why should weed be used to fund education or infastructure???
Why not Cheerios? Milk??
If weed is bad, it should be illegal.
If weed isn't bad, it should be legal, and the feds shouldn't be able to refill their coffers by sales.

I don't think alcohol or cigarettes should be taxed at a higher rate either. (I also feel that healthcare in every form should be a personal responsibility/cost...get cancer from smoking? not my problem!!)

The feds need to F%CK off in every sense of the word, quit taxing and subsidizing. Let people make their own choices and bear their own burdens, or thrive from their own gains accordingly.

The feds have OUTLAWED PERSONAL RESPONSIBILITY, do I have to pay 77% to get that back too?

a reply to: tothetenthpower

This save the Children from Marijuana really twists my nipplets!

Save the children from Alcohol and Tobacco products, save the children from abject poverty, malnutrition and disease. Save the children from a government hell bend on controlling every aspect of our everyday lives and from removing our basic freedom, little by little, as the days go by.

Oh wait that might make sense, cant have that now!

a reply to: doompornjunkie

Why is it ok only because people have to pay more!!!???

What do you mean by this? It should be OK regardless, but you have to start somewhere.

Why should weed be used to fund education or infastructure???
Why not Cheerios? Milk??

That's a nonsensical question.

If weed is bad, it should be illegal.

It isn't bad, it isn't good. It's all relative. I've worked in the medical MJ industry for over a decade, there are pros, there are cons. It's a matter of context.

If weed isn't bad, it should be legal, and the feds shouldn't be able to refill their coffers by sales.

We pay tax on everything sold pretty much other than food. Why should weed be any different? Why should it be treated any different than alcohol?

You CANNOT have industry in the 21st century without the tax system. At least not in this current setup.

I don't think alcohol or cigarettes should be taxed at a higher rate either. (I also feel that healthcare in every form should be a personal responsibility/cost)(get cancer from smoking? not my problem!!)

Yes yes, all taxes are bad, I don't wanna take care of my neighbor, that's unrealistic.

The feds need to F%CK off in every sense of the word, quit taxing and subsidizing. Let people make their own choices and bear their own burdens, or thrive from their own gains accordingly.

Doesn't work that way anymore, sorry. The playing field isn't level enough from the get go to allow that to happen. You'd have to fix the fact that the top 20% own 85% + of all the wealth.

~Tenth

The federal government still has pot as an illegal drug, some state governments do not.
You can't claim illegal activity on your federal tax return. Pretty simple really.
Take gay marriage for example, just because a state makes it legal, you still can't file a joint federal tax return.

originally posted by: tothetenthpower
a reply to: doompornjunkie

Taxing MJ sales is actually the only way to make it a sensible, large scale industry.

The whole idea was to use the profits to help states bridge the gab between revenue and the ever dwindling amount being given out by the Fed for infrastructure, education etc.

And considering a pound of pot can be made, at very high quality for about 10$, it only makes sense that they would tax it, at a high rate in order to push money back to the state coffers. Now 77% is obviously a bit much, but 30 isn't out of the realm of understanding in the first 5 or 10 years of the program.

The issue is that without tax incentives for business owners, it's more than likely allowing the black market to continue to flourish.

~Tenth

I would also LOVE to see our source that weed can be grown (at very high quality) for $10/lb. I know for a fact that after supplies, utlities, and time it takes much more than $10/lb lol!

Not saying that I used to do it or anything. My Bio-645 professor in college DEFINITELY was not a hippie botanist. and I never helped her with such things... never!

a reply to: doompornjunkie

I would also LOVE to see our source that weed can be grown (at very high quality) for $10/lb. I know for a fact that after supplies, utlities, and time it takes much more than $10/lb lol!

I've been growing for medical patients for a very, very long time. And yes, that's what it costs, at cost, to grow high quality MJ. I might be under valuing by a few bucks, 5 max but yeah. It's a very low cost crop.

Sure, you have to invest initially in the kind of setup that allows for that sort of thing, but it doesn't take very long to get to parity.

ETA: Actually one of the reasons parity arrives so quickly is because of tax write offs...

~Tenth