Washington, DC – Today, Congressional lawmakers and leaders of the cannabis industry joined in Washington, DC to call for sensible reform to federal marijuana policies that would update tax, banking, to reflect the expanding legal marijuana industry.
Congressman Earl Blumenauer (OR-03) introduced H.R. 2240, the Small Business Tax Equity Act, which would change Internal Revenue Code Section 280E to allow state-legal businesses, such as medical marijuana dispensaries, to take standard business deductions when computing their taxes.
“These businesses cannot deduct entirely legitimate operating business expenses,” said Blumenauer. “They cannot claim the work opportunity tax credit if they hire a veteran, depreciate their American-made irrigation equipment, or utilize the deductions for the expenses associated with their operating costs. As a result these small businesses are paying federal income taxes that are often double or triple the effective tax rate of most businesses.”
Under federal banking laws, many marijuana businesses that follow state law are forced to operate cash-only enterprises and prevented from opening bank accounts and operating as any other businesses would.
"We need to address the public safety, crime and lost tax revenue associated when these legal and regulated businesses are operating in a cash-only system,” said Congressman Ed Perlmutter (CO-07). “We also need to provide financial institutions assurance that they can make their own business decisions related to legal, financial transactions without fear of regulatory penalties or criminal prosecution."
“As a former entrepreneur who started a number of companies, I know how important it is for our businesses to compete on a level playing field,” said Congressman Jared Polis (CO-02). “The federal government shouldn’t be in the business of picking winners and losers. But even in states where marijuana use is legal, legitimate marijuana businesses face extra scrutiny and are not able to deduct legitimate business expenses like rent and wages. I applaud Congressman Blumenauer for introducing this important legislation, and I look forward to working with my colleagues to end the federal government’s failed policy of prohibition. We can start today by ensuring that all state-legal businesses receive the same federal tax treatment.”
Since California first approved medical marijuana in 1996, medical marijuana businesses have existed in a legal gray area, constantly alert to federal prosecution and penalties. Many other states now allow medical marijuana businesses, and voters in Washington and Colorado have allowed the sale and use of recreational marijuana. While states have expanded legal economic opportunities, federal laws continue to burden these emerging small businesses.
Sean Luse of Berkeley Patient’s Group said, "The Department of Justice is undermining the authority of state and local officials who steadfastly support medical cannabis in our community by diverting limited resources away from the real issues, such as fighting violent crime and getting illegal guns off our streets, in favor of cracking down on licensed medical cannabis providers. Members of Congress need to hear directly from those who are caught in the middle of the conflict between state and federal law."
“Cannabis is poised to become the next big industry in the United States and around the world,” Ean Seeb, Vice-Chair of the National Cannabis Industry Association board of directors and operator of Denver’s first medical marijuana center said. “NCIA is the sole organization that works with business members from across the country, fighting for simple parity on issues like taxes and banking. Association members are headed to Washington with a unified message to legislators: Treat us as you would any other business.”