Running a business is not easy, but men and women in the state-legal medical marijuana industry have it worse than everyone else because of outdated federal laws. The way current laws are written, even though these people run a state-legal business they are not allowed to deduct all of their expenses the way other business owners get to do at tax time. And for some, that means they could end up owing more taxes than the entire year’s profit.
This leaves dispensary owners, growers, medible makers and everyone else in the 23 states with a state-legal medical marijuana industry confused about exactly what they’re supposed to do at tax time. And, since the laws are the problem, even a good accountant can’t provide the answers they want to hear.
Most of these small business owners have never run a store or business before, and now they’re discovering that they can’t compete using the same rules as everyone else. These men and women are already paying state business fees and taxes that are horrendously bigger than those charged to every other business owner, including the cigarette, alcohol and adult industries.
And, to make matters worse, our Federal Tax Court has already denied deductions on everything from store rent to medical marijuana legally purchased for sale to patients in this state-sanctioned industry. The IRS does this by combining the Controlled Substances Act of 1970 classifying marijuana as a Schedule I drug together with IRS Code Section 280E disallowing the deduction of controlled substance expenses. This allows them to grab any profit made by these small business owners and drive them out of business. Because of this, everyone in the medical marijuana industry who turns in an honest tax return becomes a sitting duck for anti-marijuana auditors.
Before these legitimate businessmen and women can compete fairly both federal laws must be repealed. Until they are, the state-legal medical marijuana industry will be forced to compete in the current tax world, a place where the IRS can wipe out all of their profits at any time and the black market is actually safer.
Because the U.S. Department of Health & Human Services owns patent #6630507 for the anti-oxidant properties in marijuana , and the U.S. patent office has granted marijuana patents to big pharmaceutical companies, it’s obvious that marijuana has medicinal value. Combined with the documentation of successful medical use in Israel and other countries, it appears to be time for the 1970 Schedule I drug label’s repeal. But, that’s not going to happen any time soon unless the medical marijuana industry unites and demands that change.
If growers, dispensary owners, medible makers and patients don’t speak up for this industry today, they can expect continued problems for years to come. Medical marijuana patients and business owners only have two choices; they can continue to accept discrimination for their choice of a natural medicine or they can come together as a group and get those federal laws changed. If they choose the first option they might as well close their doors now because taxes are going to drive them out of business pretty quick anyway; but if they push for the equal rights that they deserve as an industry it will open the door for legitimate business success and real profits.
Since every politician takes an oath to represent the voters in his or her state, and your state has repealed prohibition, it is the politician’s job to get those federal laws changed. Medical marijuana business owners need to schedule meetings with their state senators and representatives to discuss this problem today. And, they should expect results. It is every voter’s right to demand accountability, and state-authorized medical marijuana businessmen and women have the right to know what their elected officials have done to end this tax discrimination.
If the industry waits too long, it’s obvious that the voters in medical marijuana states will have their rights overturned, big business will be given control over the marijuana plant, poor people who have had success with medical marijuana will be forced back onto dangerous and addictive prescriptions, health insurance costs will skyrocket as everyone is forced to pay for Big Pharm’s synthetic marijuana prescriptions for people with insurance, and prohibition against nature will continue.