Running a business isn’t easy, but the men and women in the state legal medical marijuana industry have it worse than everyone else due to outdated federal laws. The way current laws are written, even though these people run a state legal business, they are not allowed to deduct all of their expenses the same way other business owners do at tax time. And for some, that means they could end up owing more in tax than the entire year’s earnings.
This leaves dispensary owners, growers, drug manufacturers and everyone else in the 23 states with a state legal medical marijuana industry confused about what exactly they are supposed to do at tax time. And since the laws are the problem, even a good accountant can’t provide the answers they want to hear.
Most of these small business owners have never run a store or business before, and are now finding that they cannot compete by the same rules as everyone else. These men and women are already paying fees and state business taxes that are terribly higher than those charged to all other business owners, including the cigarette, alcohol and adult industries.
And, to make matters worse, our Federal Tax Court has already denied deductions on everything from store rent to legally purchased medical marijuana for sale to patients in this state-sanctioned industry. The IRS does this by combining the Controlled Substances Act of 1970 which classifies marijuana as a Schedule I drug along with IRS Code Section 280E which does not allow the deduction of controlled substance expenses. This allows them to take any profit made by these small business owners and put them out of business. Because of this, everyone in the medical marijuana industry who files an honest tax return becomes easy prey for anti-marijuana auditors.
Before these legitimate businessmen and women can compete fairly, both federal laws must be struck down. Until they are, the state legal medical marijuana industry will be forced to compete in today’s tax world, a place where the IRS can wipe out all your profits at any time and the black market is actually safer.
Because the US Department of Health and Human Services holds patent #6630507 for the antioxidant properties of marijuana, and the US patent office has granted marijuana patents to large pharmaceutical companies, it is obvious that marijuana has medicinal value. Combined with the documentation of successful medical use in Israel and other countries, it appears to be time for the repeal of the 1970 Schedule I drug label. But that’s not going to happen anytime soon unless the drug industry medical marijuana unite and demand that change.
If growers, dispensary owners, drug makers, and patients don’t stand up for this industry today, they can expect continued trouble for years to come. Medical marijuana patients and business owners only have two options; they can continue to accept discrimination for their choice of natural medicine or they can come together as a group and change those federal laws. If they choose the first option, they might as well close their doors now because taxes will put them out of business pretty quickly anyway; but if they push for the equal rights they deserve as an industry, it will open the door to legitimate business success and real profits.
Since all politicians take an oath to represent the voters in their state, and their state has repealed the ban, it is the politician’s job to change those federal laws. Medical marijuana business owners should schedule meetings with their state senators and representatives to discuss this issue today. And, they must expect results. It is the right of every voter to demand accountability, and the men and women of state-licensed medical marijuana businesses have a right to know what their elected officials have done to end this tax discrimination.
If the industry waits too long, it is obvious that voters in medical marijuana states will have their rights revoked, big business will gain control of the marijuana plant, poor people who have had success with medical marijuana will be forced back to dangerous and addictive prescriptions, health insurance costs will skyrocket as everyone is forced to pay for Big Pharm’s synthetic marijuana prescriptions for those with insurance, and prohibition against nature will continue.