Tax Laws Treat Marijuana Businesses Like Seedy Drug Dealers

Marijuana legalization has brought about an entirely new industry that serves many different subsets of the population. From elderly people taking the drug to manage pain to ultra marathon runners who want to calm their minds during a long run, the typical pot consumer is no longer just a "stoner". Although the business itself has evolved to meet these new needs, current federal regulations still treat small business owners working in the marijuana trade like traditional drug dealers. Sky High Taxes Unlike other entrepreneurs, marijuana businesses are unable to claim exemptions for expenses related to their operations. A 1982 law prohibits anyone from taking deductions related to "the illegal trafficking" of drugs. Although marijuana sales are legal in several states, the federal government still views the drug as a criminal substance, thus making tax time a nightmare for firms dealing in pot. Differing Laws Create A Problem The tax issue represents yet another major problem with the divergence between state and federal laws when it comes to marijuana. Although the Obama administration has promised to stay out of states' decisions to legalize cannabis, the need for cohesive legislation is growing. The federal government's classification of pot as a criminal substance has prevented more extensive testing on the drug's effects, created a challenge for law enforcement agencies and stifled innovation in a rapidly expanding industry. Taxes Only The Beginning Not only are small businesses struggling at tax time, but they are also finding it difficult to operate on a day to day basis. Banks bound by federal laws are unable to engage with marijuana-based businesses leaving small business owners unable to secure a loan or even open an account and process payroll.