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Understanding the tax system

For the government to run, it needs money, and we can all agree on that. So the government taxes its people and pays for all the jobs within the government. The federal taxes help pay for the president, congress, federal judges, and the military.

Meanwhile, state taxes help pay for local roads and governors. County and city taxes pay for schools, fire trucks, and the police. Then there are payroll taxes; payroll withholdings are taken out of an employee's paycheck every time payroll is run. Within these, there are federal, state, and even local taxes. So the withholding taxes are the employer withholds of a percentage of the employee's income for federal, state, and local taxes.

However, as much as we see the cannabis businesses bloom, it is only their leaves that are blooming because the cannabis businesses are being taxed an insane amount. Cannabis businesses are paying 3.5 times higher tax rates on average than non-cannabis businesses because cannabis businesses are

not allowed to take "normal" tax deductions

The effects are that licensed cannabis businesses can't invest as much in capital improvements or employee raises & benefits, hiring more employees, expanding operations, or giving back to the community. These are only a few of the disadvantages of being a cannabis business. A higher turnover to higher prices. So, how come this unfair tax section was created?

The story began in 1982 when in a tax court case where a dealer reasoned and was able to write off unbelievable expenses (including his telephone, car mileage, and personal entertainment). Shortly after that case, congress then invented a tax code to bar tax deductions for businesses connected to the sale of any schedule I or II substances. The code was supposed to penalize criminal market operators, not state-legal cannabis businesses. However, marijuana still falls under Schedule I Substance, along with heroin, LSD, MDMA, and GHB. So even for licensed cannabis companies, the tax code 280E applies to businesses that comply with state laws and regulations.

There is hope

Also, do not forget to check on the events that I will be attending

August 26th-27th, 2022

Albany Capital Center | 55 Eagle Street, Albany, NY

Exhibit Hall Hours Friday: 10am-5pm | Saturday: 10am-4pm

September 9th-10th, 2022

Atlantic City Convention Center 1 Convention Blvd, Atlantic City, NJ

OCTOBER 7-8, 2022

Friday & Saturday, 10AM – 5PM Jackson Convention Complex

Oct. 10-12, 2022

New Jersey Convention Center

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