Posted on February 28, 2013 by News Admin
Unlike most every other legal business out there, medical marijuana
shops owners aren't allowed to take any deductions on their federal
income taxes - leaving many facing federal tax rates of 50 percent or
According to a CNN Money story earlier this week, the high tax rate is due to a 1982 change in federal tax laws known as 280E. It seems back in the 1980s some enterprising drug runner was able to successfully claim his guns, boats and money used in bribes as business expenses. In response to that, the IRS pushed a law saying that "drug trafficking organizations" can't deduct from their taxes.
Since the federal government considers state-legal medical marijuana operations as illegal drug trafficking, those dispensaries can't take any of the normal deductions - travel, equipment, etc. That leaves them with a bill nearly twice as high as a similar-sized, federally-legal business would have.
Denver Relief dispensary owner Kayvan Khalatbari tells CNN the high rate prevents him from giving his 15 staff members raises. He estimates that his shop does about $1 million annually in sales, but that he's sending as much as 50 percent of that back to state and federal governments. The story also quotes Colorado medical marijuana accountant Jim Marty who says he has a client that was hit with a $300,000 tax bill in 2012 despite not turning a profit from 2009 through 2011.
In Colorado, dispensaries have been getting a double-dose of this tax treatment. Currently, a Colorado return relies on the federal taxable income; therefore it is illegal for owners of state-legal medical marijuana businesses to claim business deductions on state income taxes. There is currently legislation before the Colorado legislature - House Bill 1042 - that would allow medical marijuana dispensary owners to make deductions at the state level.
The IRS has said they are merely following the law, and that congress would have to make any changes to federal tax codes. Past attempts, like 2011's Tax Equity Act which would have created a medical marijuana exemption, failed to get enough support. One group working to reform the law, 280E Reform, says it is a necessary step in legitimizing what is otherwise a legal and authorized industry in the 18 states (including Washington D.C.) that have authorized it's use."Should the IRS campaign be successful; it will throw millions of patients back in to the hands of street dealers; eliminate tens of thousands of well paying jobs, destroy hundreds of millions of dollars of tax revenue; enrich the criminal underground; and endanger the safety of communities in the 17 medical cannabis states," said Steve DeAngelo, high-profile Oakland dispensary owner and spokesman for the campaign.
We've helped thousands of happy customers start & run their medicinal & recreational businesses in all legal states. Whether you're serious, curious or just looking to gather information, GreenZipp can help.
Primarily through word-of-mouth alone, GreenZipp has become the company people trust to help start and run their legal marijuana businesses. For the last 4 years, people have been using GreenZipp because it's famously easy, straight forward, with no hidden costs. Combine that with our best-in-the-biz customer service, and you've got a unique and delightful offering of products and services.
We've been in business for 5 years, so you can depend on us to alleviate the anxieties and pressures of starting and running your business. Not once, has a single customer ever been in trouble with the law - ever. We're extremely proud of that number. Our job is to keep you safe and compliant with regulations and allow you to run your company without fear or anxiety. We've gone and will continue to go to the ends of the earth for our customers. Learn more about our company.
Many customers come to us saying that they've been told they need a lawyer to start their businesses. Sure, you can definitely use them, but you don't need them. Heck, you can even do it yourself if you don't mind putting in the time and making some costly mistakes from time to time. We take the complicated, confusing and time-consuming process of starting or running your marijuana business and boil it down to plain, detailed and easy-to-follow steps. Or, we can just do the whole process for you.
Here's the best part: We're so effective, lawyers and law firms hire us to service their marijuana industry clients for them.
Absolutely. You can see how our customers feel about us via an independently certified, 3rd party review website. We're extremely proud of our 5 out of 5 Star rating.
We offer a free Starter Package to help people understand the industry and us a little better. Check it out.
New business owners, seasoned entrepreneurs, investment groups and law firms all rely on GreenZipp. We've been fortunate to earn the repeat business of our customers, including some of the top lawyers and law firms in the country.
There's a lot of (mis)information out there. At best, it's usually speculation from non-professionals, old wive's tales or completely fabricated. It can be tough to navigate. With that in mind, here are a few things we've prepared for you:
GreenZipp is a medical & recreational marijuana consulting firm that's helped thousands of customers establish and run their marijuana businesses in all legal states. With industry-leading, streamlined and cost-effective products and services that abolish hourly & hidden fees, we'll be sure to make you happy.
We’ll send periodic news, new product releases and exclusive promotions.