Yahoo Finance Tax day: Pot businesses blocked from deductions
It’s tax day and whether you are counting your cash from a refund or writing a check to the IRS, one up and coming industry is getting hosed on tax day: marijuana.
Pot is becoming a big business in states where it’s recreational use is legal (Colorado, Washington, Oregon and Alaska) but unlike other small businesses that can write off things like their truck or their employees’ salaries, those in the pot business can’t take advantage of any deductions.
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“It’s legal in certain states but it’s against the federal law and so you can’t use any of the federal deductions,” notes Yahoo Finance’s Aaron Task.
Complicating things further is, as Yahoo Finance Editor in Chief Andy Serwer says, “the marijuana business is not a part of the banking system so these businesses are all cash, which is a huge risk. We’re half pregnant with this and it has to be resolved one way or the other.”
With national legalization unlikely in the foreseeable future it’s up to the states where pot is legal to try to change the tax law instead. Enter Oregon Democrats Sen. Ron Wyden and Rep. Earl Blumenauer. With pot legal in their home state, the two legislators want Congress to pass the Small Business Tax Equity Act.
Yahoo Finance Senior Columnist Michael Santoli summarizes such a law thusly: “ if something is legal in a given state and you spend the money and costs in a given state...you can deduct it.”
Similar measures have been floated before but have failed to offer relief for the small business owners who are being impacted.
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