Katelyn Baker
Well-Known Member
Marijuana businesses that crop up around Ohio once the state's medical marijuana law goes into effect are likely to face a steep tax burden.
A line in the Internal Revenue Code known as Section 280E prohibits businesses involved with the trafficking of illegal drugs from deducting any business expenses from gross income. Since marijuana is illegal at the federal level, the Internal Revenue Service has applied the rule to legal medical marijuana businesses and will do so in Ohio unless something changes before things get underway.
That's an unlikely outcome, according to Taylor West, director of the National Cannabis Industry Council, who spoke an Ohio medical marijuana seminar put on by Dickinson Wright PLLC.
West and Dickinson Wright attorney Brett Kravitz both said that tax law stipulation has hammered profit margins for businesses in states where marijuana is legal. West said it can bring a business' effective tax rate up to 50 percent to 90 percent.
One way to alleviate the burden would be to reschedule marijuana — it's currently a Schedule I drug in the same category as LSD and Quaaludes — but West said there's "no indication (the Drug Enforcement Administration) is moving in a new direction" with marijuana's status.
"It's very important that people understand that when we're asking for 280E reform, the industry is not asking for tax breaks," West said. "It often gets translated that way because that's language that people are used to.
"In reality all we're asking is for businesses to be treated the same as any other business," West said, "and not be given this crushing tax burden that was intended for criminals — not for state-compliant businesses."
News Moderator: Katelyn Baker 420 MAGAZINE ®
Full Article: Here's How The IRS Will Hurt Ohio's Medical Marijuana Industry
Author: Jeremy Hill
Contact: Cincinnati Business Courier
Photo Credit: Matthew Staver
Website: Cincinnati Business Courier
A line in the Internal Revenue Code known as Section 280E prohibits businesses involved with the trafficking of illegal drugs from deducting any business expenses from gross income. Since marijuana is illegal at the federal level, the Internal Revenue Service has applied the rule to legal medical marijuana businesses and will do so in Ohio unless something changes before things get underway.
That's an unlikely outcome, according to Taylor West, director of the National Cannabis Industry Council, who spoke an Ohio medical marijuana seminar put on by Dickinson Wright PLLC.
West and Dickinson Wright attorney Brett Kravitz both said that tax law stipulation has hammered profit margins for businesses in states where marijuana is legal. West said it can bring a business' effective tax rate up to 50 percent to 90 percent.
One way to alleviate the burden would be to reschedule marijuana — it's currently a Schedule I drug in the same category as LSD and Quaaludes — but West said there's "no indication (the Drug Enforcement Administration) is moving in a new direction" with marijuana's status.
"It's very important that people understand that when we're asking for 280E reform, the industry is not asking for tax breaks," West said. "It often gets translated that way because that's language that people are used to.
"In reality all we're asking is for businesses to be treated the same as any other business," West said, "and not be given this crushing tax burden that was intended for criminals — not for state-compliant businesses."
News Moderator: Katelyn Baker 420 MAGAZINE ®
Full Article: Here's How The IRS Will Hurt Ohio's Medical Marijuana Industry
Author: Jeremy Hill
Contact: Cincinnati Business Courier
Photo Credit: Matthew Staver
Website: Cincinnati Business Courier
