Senator Cory Gardner is looking to take some of the strain off of running marijuana businesses by allowing them federal deductions on their taxes.
For many small businesses, the difference between turning a profit or losing money comes down to tax deductions. Unfortunately, marijuana businesses are not permitted to claim any breaks on their federal taxes. When combining that with extremely high tax rates to do business in many areas, companies often struggle to survive in the marijuana industry.
Sen. Cory Gardner (R-CO) is co-sponsoring a new bill to help alleviate the problem for marijuana businesses. If passed, the Small Business Tax Equity Act would allow businesses in the industry to work around Internal Revenue Code 280E, which prevents businesses working with banned substances to claim tax credits.
The bill was introduced several months ago by Ron Wyden, (D-OR), and Rand Paul, (R-KY).
“Our current tax code puts thousands of legal marijuana businesses throughout Colorado at a disadvantage by treating them differently than other businesses across the state,” Gardner said in a statement emailed to The Cannabist. “Coloradans made their voices heard in 2012 when they legalized marijuana, and it’s time for the federal government to allow Colorado businesses to compete.
“This commonsense, bipartisan bill will allow small businesses in Colorado and other states that have legal marijuana businesses to grow their operations, create jobs, and boost the economy,” Gardner continued.
Currently, the house version of the bill has 39 co-sponsors.
With 29 states legalizing medical marijuana and 8 states legalizing recreational use, Congress could benefit considerably by changing the tax laws for the industry. It could allow more businesses to succeed and create new jobs. It could also be the first step in creating a formal federal tax structure for marijuana sales. Federal authorities could keep a closer eye on the industry and rake in additional tax revenues.