Oregon Rep. Earl Blumenauer introduced legislation in the U.S. House of Representatives this week that would allow regulated cannabis businesses to receive tax credits commonly enjoyed by companies in other industries. The bill, known as the Small Business Tax Equity Act, was introduced by Blumenauer on Monday and was signed by both Republicans, Rep. Barbara Lee of California, Rep. Nancy Mace of South Carolina, and Rep. David Joyce of Ohio. received a bipartisan joint proposal by .
Under Federal Tax Code Section 280E, cannabis businesses are denied most tax credits offered to businesses in other industries. State law-compliant marijuana businesses are allowed to deduct the cost of the merchandise they sell, but most cannabis businesses do not deduct other expenses such as rent, labor, and utilities.
“The state’s legal cannabis businesses are denied equal treatment under 280E. They cannot fully deduct the costs of doing business. You’ll pay double or triple the cost,” said Blumenauer, founder of the bipartisan parliamentary cannabis caucus. said in a statement on monday. “This grotesque and unfair treatment motivates people to cut corners. It is common sense to allow commercial cannabis businesses to deduct operating costs.”
Small Business Tax Equity Act We make an exception to Section 280E to allow marijuana businesses operating under state law to receive deductions related to the sale of marijuana just like any other legal business.
“Without this law, Section 280E of the federal tax code would prevent cannabis businesses from deducting normal expenses associated with running a small business, such as rent, utilities and salaries,” said Blumenauer’s office. is writing “If you hire veterans, you can’t claim the work opportunity tax credit. They can’t depreciate American-made irrigation equipment. No credits or deductions related to operating costs are available.”
Cannabis business and reform groups, including the National Organization for Marijuana Law Reform (NORML), have welcomed Blumenauer’s bill, which would allow companies in the regulated marijuana industry a standard business tax credit. Competing with the established underground cannabis market.
“NORML applauds the sponsors of this law to end unjust federal overtaxation of licensed and state-regulated cannabis businesses nationwide,” said Morgan Fox, NORML’s political director, from the group. “By allowing us to receive the same federal tax exemption that most other businesses enjoy, we will facilitate new opportunities in the legal cannabis industry and bring it closer to the unregulated market,” it said in a statement. It will be more competitive and will directly benefit consumer health and public safety.”
“The two biggest challenges facing cannabis entrepreneurs today are a lack of access to capital and an unfair tax burden,” said Saphira Galoob, executive director of the National Cannabis Roundtable. “By eliminating 280E’s impact on the state’s legal cannabis businesses, Congress will ensure that these businesses, including small and minority businesses, remain financially viable and have corporate tax credits through tax credits and deductions. , communities, and the workforce that will be regularly provided to other domestic industries.This relief will employ hundreds of thousands of American workers and provide access to traditional financial resources. It’s incredibly important to an industry that generates billions of dollars a year in state and federal taxes, even though it can’t.”
Elimination of the effects of 280E is also underway in cannabis legal states, many of which use federal tax laws as the basis for state tax rules. So far, 19 states have separated their tax laws from 280E, and the move continues in others, including Connecticut, where Congress is currently considering such action. Dr. Lucas C. McCann, co-founder and chief scientific officer of cannabis business consulting firm CannDelta Inc., welcomed efforts to repeal Section 280E regulations at the state level.
“The separation of 280E will allow these cannabis companies to charge basic operating expenses,” McCann wrote in an email. high times“Failure to do so will inevitably lead to bankruptcy for many, and the illicit market is likely to continue to thrive as it did before legalization.”