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Pot Dealers Could Have To Pay 75% In Taxes!

From CNN’s Money.com:

Marijuana dealers get slammed by taxes

By Steve Hargreaves | February 25, 2013

NEW YORK (CNNMoney) – Thanks to a decades-old law targeting drug runners, entrepreneurs in the nascent medical marijuana industry face a unique burden: an effective federal income tax rate that can soar as high as 75%.

The hefty levy is the result of a 1982 provision to the tax code, known as 280E, that stemmed from a successful attempt by a convicted drug trafficker to claim his yacht, weapons and bribes as businesses expenses, according to 280E Reform, a group working to overturn the statute.

Enacted in the wake of that PR debacle, the rule bars those selling illegal substances from deducting related expenses on their federal income taxes.

How horrible! Still, this suggests that marijuana really must affect one’s brain. If these dealers would just promise to plow a little of their profits back to the DNC this problem would be fixed over night.

And if they didn’t, Obama would just issue an executive order, in the same of ‘social justice.’

It may have been effective against cocaine dealers and smugglers of other hard drugs, but the law now means purveyors of medical marijuana in the 18 states that have legalized the drug can’t can’t take typical things like rent or payroll as a business expense. That’s taking a heavy toll on this new field.

"I’d personally love to give my employees a raise," said Kayvan Khalatbari [sic], co-owner of Denver Relief, a medical marijuana center in its namesake city. "But because of the industry we’re in, that’s not always possible." …

That is heartbreaking. His employees have to suffer because he isn’t getting a federal tax subsidy. (Which is what our news media now calls business deductions.)

By the way, when was the last time the news media admitted that taxes keep employees from getting raises?

Khalatbari said Denver Relief does just over $1 million a year in sales, and that not being able to take some standard business deductions costs him tens of thousands of dollars annually. He estimates his effective federal tax rate is about 50%…

50%? What is he complaining about?

Jim Marty, an accountant in Colorado specializing in medicinal marijuana tax law, said he has one client that didn’t turn a profit in 2009, 2010 or 2011. In 2012, though, she was handed a $300,000 tax bill from the IRS for those three proceeding years.

Entrepreneurs whose businesses are legal under state laws are getting hammered by outdated federal tax rules…

Remember, this isn’t an editorial. This is supposed to be a news article. (And never mind that CNN violently opposes similar ‘subsidies’ for oil companies and corporate jet makers.)

The Internal Revenue Service did not respond to a request for comment. In a letter to a congressman in 2011, the agency said it was merely enforcing the law, and that Congress needs to change the law if it does not want medicinal marijuana dealers caught up in the provision.

Several groups are working on just that, though it’s unclear if the law will be changed anytime soon. The Obama administration has so far not expressed much interest in weighing in on the matter.

Again, they have forgotten they have to prime the pump.

Until then, those in the industry will keep looking for crafty ways to minimize their tax bill, and pay the tax man when they can’t…

Oh, so they are going add being tax cheats to being drug peddlers? How nice.

This article was posted by Steve Gilbert on Monday, February 25th, 2013. Comments are currently closed.

One Response to “Pot Dealers Could Have To Pay 75% In Taxes!”

  1. canary

    Fascinating video of the little Red shop in Seattle. They really do sell it in baggies and jars with handwritten labels. No telling whose handled or pee’d on it, so the nerve of taxing it.


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