It is difficult to imagine running a business where you are unable to deduct your business expenses when filling out your Federal taxes, but this is just part of the headache that marijuana businesses are facing.
It is possible in some states to sell medical marijuana through legitimate businesses and in a few states it is even possible to sell the drug for recreational purposes and this is great news if you are looking to enter this business area.
The growth of businesses who want to help and produce marijuana is growing; it is even possible to secure a medical marijuana payment processing merchant account and to accept credit and debit card payments form your customers. However, surviving might be tricky with the amount of taxes that you have to pay.
While the practice of running a business in some states is legal, the Federal government still sees it as a Schedule 1 drug and therefore, they can use the 280E tax code, which came into force in 1982. This code means that if you sell schedule 1 drugs you are unable to deduct any business expenses unless linking directly to the drug. Advertising or staff wages are not an allowable expense and this means that many business owners are paying taxes that equate to around 70% and over, compare this to normal business owners whose tax is around the 30% mark it seems excessive.
Many business owners feel that while they have won the fight with the voters, the government is doing all they can to put legitimate business out of business. What is disturbing, if a normal business makes a loss during the year there is no Federal tax to pay, if a marijuana business makes a loss they still have to pay tax.
The problem is that Congress needs to address these issues and yet this hasn’t happened. It is important to hear the voter’s, how they feel over marijuana, the way it is helping those people in need. Now it is the time for Congress to help these businesses too.
After all, they are providing a service that is creating jobs, improving local economies and yet Federal government is looking to force them out of business.
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