New Federal Tax Code Threatens Marijuana Profits
According to USA Today, despite marijuana legalization voting efforts in Oregon, Alaska, and Washington D.C. today, newly approved cannabis dispensaries from this point forward will have to compete with federal tax codes that are already hampering business in Colorado and Washington. These tax codes are designed to ensure that the federal government will make more money from the sale of marijuana than those producing and selling it, which many owners are expressing distaste for. "It's almost like they want us to fail," said Mitch Woolhiser, dispensary owner of Northern Lights Cannabis Co., to USA Today. Since opening his shop in 2010, Woolhiser has had a roller-coaster of a ride in an industry wrought with regulation. Last year, he didn't even earn a profit, and actually ended up owing the IRS nearly $200,000 because of a 1980's tax code called 280E, which some are calling an extension of the drug war. Although it's somewhat uncertain as to whether or not the federal government is enforcing the new tax code in an effort to purposely hurt legal dispensaries, this is exactly what is happening. Many other dispensaries across the country are having to pay excessive tax rates for marijuana, and in some cases, more than double what an average business pays. "A lot of times, instead of paying a tax rate that could be 30-40%, they are paying rates between 80-90%," said one accountant in the industry. Even though more states are preparing to legalize marijuana in the near future, the fact that marijuana is still illegal on a federal level brings financial burdens that marijuana businesses are being strangled by.