More on Cannabis Taxation
Bottom line, Americans like getting stoned. It is the fastest-growing industry in the US. Last year Americans spent over $30b on legal cannabis products, and we all know how many illegal businesses there are, so maybe the number is more like $40b with that tossed in.
In comparison, for other vices, in the US, candy sales were roughly $40b, and the market size of the alcohol industry, including beer, is $74b. These industries have been regulated and legal for decades. Whereas California was the first to legalize medical marijuana in 1996 and recreational marijuana in 2016. It was legal until 1937 when the Government classified cannabis as a Schedule 1 drug thanks to Harry Angslinger, who kept his job for 32 years touting the “war on drugs” demonizing Black and Brown Americans.
Candy and liquor businesses can take deductions against particular expenses deemed helpful and appropriate such as general and administrative fees, business-related travel and entertainment, automobile expenses, and employee benefits.
280E, the cannabis tax that I continue to rant about, forbids weed businesses from deducting ordinary expenses from gross income. It is insane.
After understanding 280E, somebody asked me then why is anybody doing this. Great question. All of us in the cannabis business see the opportunity, understand the toll the war on drugs has taken on countless people, and hope that we are getting into something at the ground level that will create change.
If the Federal Government continues to impede success in the fastest-growing business in the country, the mess that will be left behind will be ugly. Although when it comes to building the semiconductor industry, the Biden administration is taking $400bn in tax credits, grants, and loans to prop up the industry. What would the semiconductor industry and clean-tech manufacturing base look like or do if they were being taxed at 70% with almost zero deductions?
It is time to make a change and repeal 280E to cannabis at the Federal level and deschedule the plant from a Schedule 1 drug to the same as alcohol. Cannabis is categorized as a controlled substance, whereas alcohol is not. Have they heard of alcoholism? That does not happen with cannabis. Taxing the number one burgeoning industry in our country is egregious, disdainful, and absurd.
It makes me wonder what lobbyists from industries that will suffer from more cannabis products, particularly in the medical space, are lining our Senator’s pockets. Americans want to buy legal cannabis products and benefit from the research being done and the impact is making.
Let your Senators know enough is enough, and the numbers prove it.