Posted on 02/18/2016 4:36:53 PM PST by Mariner
Legal marijuana sales in Colorado and Washington State have grossed billions, but legal dealers will see little of that thanks to a draconian federal law meant to punish street pushers.
In one of the first years of legal sales, 2015, Colorado moved nearly $1 billion worth of marijuana and is estimated to take in $135 million in taxes on it. Meanwhile, Washington is expected to pull in around $1 billion in revenue from sales taxes between 2015 and 2019. Despite technically being illegal on the federal level, these businesses must file taxes to the Internal Revenue Service—and they may pay as much as 70 percent in taxes to the feds.
That’s thanks to Section 280E of the tax code. Congress passed the measure in 1982 so that businesses who are “trafficking in controlled substances†that are prohibited by federal law may not utilize many tax deductions and credits available to other businesses, like deducting rent and employee-related expenses. That means a marijuana business owner can pay an effective tax rate as high as 70 percent, as opposed to the more typical 30 percent rate.
It came about when a Minneapolis drug dealer named Jeffrey Edmondson tried to argue in court that he should be allowed to write off expenses related to his business. That greedy bastard.
(Excerpt) Read more at thedailybeast.com ...
They will grow, dry, process and package weed, tax free.
Already their cost for a carton of Marlboros is about $8, and they sell them for $40.
Let me check my understanding:
Da Gummint seeks to punish those selling on the street by RAISING the price of pot sold in STORES..?
That sounds like in a disaster confiscating guns of those who ABIDE by the law.
It’s the same logic.
Or, “The bus system isn’t making enough money so let’s RAISE prices...”
Gee, you think black market marijuana will be taxed?
So much for shutting down the drug cartels...
And a longtime FReeper is involved in Washington state's screening process.
This is a giveaway to the Mexican Cartel.
Ever notice how when Da Gummint gets really, really tight with a business, it’s usually in something that hurts people, is addictive, or wrecks lives?
Weapons
Lotto Tickets
Drugs
Since it’s an all cash business, and banks may not accept accounts, the Feds don’t have a clue how much money there is.
So how can these business pay the taxes, since they are cash only due to federal laws which prohibit them using banks?
I still do not understand how the state or the federal govt can take funds from drug dealers. If you follow federal law is that not illegal to receive funds from drug dealers. Is it not against federal law to grow and sell weed. I guess I am very confused...
I read an article on this the other day. In Colorado, they load the cash into big ol’ satchels and drive it down to the tax office the old fashioned way.
Lol, knew this would happen. Marijuana was better off illegal. The govt was bound to get involved in regulating and taxing it and creating more problems for the marijuana business.
Guess marijuana producers thought they were to special for the govt to do that to them!
In pennies?
Or maybe just because a legal alternative is available doesn’t mean everybody is going to want to use it.
So... the way to go about this is to grow your own. No business, no taxes.
Imagine that.
Since it seems to be a mostly cash business, I expect them to report less in sales. Government in action.
Ha, ha, ha .... the only sensible solution is to go underground and illegal. Other than buying off the local, state and federal gov’t leaders and agencies, they will still be money ahead of paying 70%.
.gov certainly has a clue what they are making if they are running a legal business and trying to pay taxes.
I read somewhere that there are no allowable deductions either.
“The power to tax is the power to destroy.”
Back to the established underground again.
Yep, though it could eventually be redirected to, say, wall construction.
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