Tax day is often a bummer, but for most businesses, it can be a source of some happiness. After all, being able to write off a ton of stuff as business expenses is often quite lucrative, and a chance to get back some profits and start off the next fiscal year on a strong note.
Unfortunately, this is not something that most workers in the cannabis industry get to take advantage of. There seems to be a Catch 22 for almost everything they try and write off, which many are saying is discriminatory, in light of how many places are now legal. The only reason for this is that these are federal taxes, and since marijuana is still illegal in the eyes of the federal government, this nullifies any deductions that could have been doled out.
“We don’t want special favors – we just want to be treated like businesspeople,” stated Nick Cihlar who runs a grow company called Subdued Excitement in Bellingham, Washington, in an interview with McClatchy DC.
While it seems only fair that marijuana businesses operating fairly and legally in their states, legalization has a long way to go, and there are many who are still against these kinds of tax breaks, even though other businesses are receiving them.
“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,” Kevin Sabet, who serves as the current president of the anti-legalization group Smart Approaches to Marijuana, told McClatchy DC.
Derek Franklin, president of theWashington Association for Substance Abuse and Prevention, agreed, claiming that tax breaks for the industry would actually make it easier to acquire cannabis because the price would go down, and it would be easier for minors to get access to the product. Of course, from the perspective of anyone living in a legal state, this makes no sense. In fact, the more taxation on cannabis, the more likely people are to still rely on the black market, since there are no taxes there.
“If someone spends $100 in our store, $77 of it is going to some form of tax – that’s federal, state, sales, whatever,” stated Tim Thompson, co-owner of aAltitude, a marijuana shop located in Prosser, Washington, in an interview with McClatchy DC. “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.”
In other words, giving tax breaks to these businesses would actually help to keep the product off the streets and out of the hands of minors.
“These deductions have been put in place for a reason. . . . It doesn’t make a lot of sense to try to inhibit our growth,” Cihlar reiterated his frustration with these taxes to McClatchy DC. “We’re taxed coming, going, left and right.”
“We’ve got to pay all our expenses,” added Thompson in his interview. “We’ve got to cover our cost of goods. We’ve got to service our debt. And hopefully we’ll get a profit.” Cannabis is taxed heavily throughout the year because of the nature of the product, so it is an added blow that the businesses then have to also pay taxes at the end of the year.
It’s clear that with all the new businesses and industry popping up all the time, these entrepreneurs need to be treated with the same courtesy as everyone else trying to make a living and hoping to be able to write off businesses expenses like facilities, employees, and donations. To see what’s going on in the world of marijuana taxation and businesses, keep up with MJBizWire for the latest updates.