Between Pot and a Hard Place: Fed Rejects Colorado Marijuana Bank

a reply to: the owlbear

Oh come on. We are talking about the IRS here. Do you honestly think they'd have any problems taxing it despite legality?

The marijuana industry's battle against the IRS

Supporters of legal marijuana cited tax revenue as big factor in pushing through laws that have allowed medical marijuana sales in 23 states and recreational pot in four. But the businesses that grow and sell marijuana in those states are also staring at a steep federal tax bill, especially when compared with businesses in other industries.

That’s because of a little-known wrinkle in U.S. tax law that has turned out to be a major problem for pot businesses, even when operating where sales of medical or recreational marijuana are legal under state law. In 1982, Congress enacted Section 280E of the federal Tax Code to prevent drug traffickers from being able to claim business expenses related to illicit dealings on their federal tax returns. (Seriously, lawmakers decided to close the loophole after a drug dealer successfully wrote off travel expenses as well as the cost of a scale for weighing drugs.)

Of course, 280E predates the recent wave of marijuana legalization on a state-level by a couple of decades, but the federal laws outlawing marijuana remain in effect. That leaves marijuana cultivators and dispensary owners across the country in a tricky situation in which they may be operating legally under the laws of their respective states while the federal government — including the Internal Revenue Service — still technically consider them outlaws.

In terms of tax filings, specifically, the legal cannabis industry has failed to adjust 280E since it was enacted. The IRS still does not let pot growers and resellers deduct expenses related to their businesses. That means marijuana business owners are technically barred from claiming even the most basic of tax exemptions enjoyed by the rest of the corporate world: from advertising costs to most employees’ salaries.

As a result, many marijuana business owners end up paying effective tax rates of anywhere from 40% to 70%, according to Derek Peterson, the CEO of Terra Tech, a publicly-traded company that produces marijuana extracts and also has plans to open a handful of dispensaries in Nevada. Others in the industry have said business-owners face effective tax rates as high as 90%. That is compared to the typical corporate tax rate of around 35%, though many large, multinational companies in the U.S. reportedly pay closer to 12.5%.

originally posted by: AugustusMasonicus
a reply to: lordcomac

I was under the impression that the alcohol lobby was more interested in keeping it illegal than drug companies.

Yeah. And the criminal justice system. You need to law up for a possession charge. The judge gets paid for their time, the lawyers get billable hours, the rehab facilities and court ordered "drug awareness" program people get their share...hell, where I am in PA, one of the largest "approved" rehab facilities was CREATED BY JUDGES.
It will be a while before we see across the board legalization. But we will see it within my lifetime (I turn 40 just after Thanksgiving). Patience. I never thought it would get this far to be honest. Just be wary everyone until it happens.

a reply to: Krazysh0t

Forgot about that. They get more than their fair share. It's all gravy for the feds. Why would they want to change it?
And they won't until the pressure is finally on for nationwide legalization. Give it ten years...ten LONG years, and I think you'll see what we've all been hoping for.

I am just glad we can discuss this on ATS. For awhile any mention of cannabis, would get the thread/post trashed.

It is a slow process and the groups lobbying to keep it illegal need to be called out. Big pharma, the alcohol industry, prison guard unions, police unions, sherriff organizations, and the Fraternal Order of Police are strongly opposed to legalization.

I think the citizens need to send them the message that we do NOT support prohibition.

a reply to: the owlbear

Why do we need to wait so damn long? It didn't take this long to repeal Prohibition, and that was a Constitutional Amendment. Heck, Prohibition in TOTAL (including the push to repeal it) didn't last anywhere NEAR as long as the Prohibition against Marijuana has lasted. And JUST because all this incorrect and negative propaganda has been ingrained in people's heads for near 100 years, we should wait longer to celebrate freedom?

originally posted by: darkbake
Over here in Washington State, companies that deal in pot also have to deal in cash. This results in a lot of cold, hard cash being trucked around. I wonder how they translate that to electronic money? Is the cash worthless if it can't become electronic?

No, it just makes those businesses who deal in the green potential (and eventual) targets of armed robbery.

This is a conspiracy site. I'm putting this out there just as a theory, if the feds want to keep the status quo, look for a very violent armed robbery against a pot shop in one of the four states in the next year. And then they'll scream "WE TOLD YOU SO!", but everyone that is in the know shall realize the obstructions to banking were the cause.

a reply to: Krazysh0t

The wheels of government move much slower than they used to in the past... It is far more bureaucratic now than it was back then.

Do you think we could build a highway system now? Or Hoover damn? Did you know the Empire State building only took 1 year and 45 days to build? It would take three years just to get an environmental study done nowadays.

originally posted by: Edumakated
Did you know the Empire State building only took 1 year and 45 days to build? It would take three years just to get an environmental study done nowadays.

Exactly. It took over 10 years to get the Surrender Tower going.

a reply to: Krazysh0t

Krazy, you're youngish...
This whole greening of America has been a literal and proverbial pipe dream for so many years. I NEVER thought it would move past medical. And that took years and efforts of an enormous caliber to pull off.

Country founded by Puritans. Easily duped by mass media and mass consumption. Half of the country identifies as Conservative. You know the type, God Bless the USA types, more Hank Williams, Jr. Than Willie Nelson...
The point of no return has been reached. In my own state of PA, DuPont heirs are funding the pro-pot movement...let that sink in...DuPont...the people that rallied to make it illegal in the first place.

originally posted by: AugustusMasonicus

originally posted by: Edumakated
Did you know the Empire State building only took 1 year and 45 days to build? It would take three years just to get an environmental study done nowadays.

Exactly. It took over 10 years to get the Surrender Tower going.

What's the Surrender Tower?
We'll keep it brief to prevent thread drift, mods...

originally posted by: Krazysh0t
a reply to: ratsinacage

What really gets me is how the presidential candidates are trying to treat the marijuana issue like it was treated for years beforehand. Only two candidates (one from each side of the aisle) support full out legalization. All the others are still terrified to show support for it even though candidates who do are celebrated for it.

It's simple:

The people who celebrate legal pot are not the same people who make substantial campaign donations.

originally posted by: jrod
I am just glad we can discuss this on ATS. For awhile any mention of cannabis, would get the thread/post trashed.

It is a slow process and the groups lobbying to keep it illegal need to be called out. Big pharma, the alcohol industry, prison guard unions, police unions, sherriff organization, and the Fraternal Order of Police are strongly opposed to legalization.

I think the citizens need to send them the message that we do NOT support prohibition.

Not ALL Law Enforcement...

Proud Member of LEAP • Law Enforcement Against Prohibition..

Check the "Private Jails/Prisons" and the fact that 95% incarcerated are there on "plea bargains" as 3 years is 'better' than 10 making license plates and stitching chic "prison denim" for Rap videos...

namaste

originally posted by: the owlbear

What's the Surrender Tower?

One World Trade Center.


I was an advocate for rebuilding both towers, locals like me use the euphemism I posted above to show our displeasure.

a reply to: JimNasium

Never said all law enforcement...however the biggest prison unions, police unions, and sheriff organizations are strongly opposed to legalization. This is a problem.

Thank you for mentioning LEAP, hopefully you guys can continue to grow snd help make the necessary changes to the drug laws.

a reply to: Edumakated

If we can somehow shove the ACA through Congress, I think we can get something like this that has bi-partisan support from the citizenry through.

a reply to: the owlbear

Yea, that was more a rhetorical question... I get it too.

originally posted by: Krazysh0t
a reply to: Edumakated

If we can somehow shove the ACA through Congress, I think we can get something like this that has bi-partisan support from the citizenry through.

Who benefited most from the ACA?

Insurance companies. Well established insurance companies taking dollars from citizens and offering little to nothing in return.

That's why it was allowed to pass with phony arguments from the right...

Congress is a money machine. It runs on the money that oils its gears. The cannibis lobby has really only gained a foothold recently. All cash...

a reply to: the owlbear

That's true. I can't argue you with you there.

originally posted by: Aleister
The coming full-country Canadian legalization will likely put quite a bit of new pressure on these topics in the U.S., Mexico, and Central and South America. The Federal Reserve is not part of the U.S. government, so the Fed probably wants a federal judge to step in and make the decision on this question, putting the ball in their court and not making this kind of change by themselves. It'll work out at some point soon, there is too much hard cash laying around for the process not to evolve.

The Mexican supreme court is about to consider legalizing recreational marijuana. This would be an event to watch with Canada also pledging to do the same. I am skeptical about full legalization in America. I feel TPTB have the issue exactly where they want it as a dividing line. They can profit from its sale while still incarcerating people. It can be used as a tool in the elections. I don't see it going much further for awhile.

a reply to: NihilistSanta

Mexico SHOULD legalize it. Then that country can FINALLY start trying to rebuild its agricultural industry that was decimated by NAFTA. Especially since America is being a stick in the mud about it.