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You are here: Home / Policy & Legal / Last Word – It’s News to The New York Times: Yes, the Cannabis Industry Has an IRS Problem
Marijuana Tax IRS 280E Federal regulations legal pot New York Times Cannabis IRS

Last Word – It’s News to The New York Times: Yes, the Cannabis Industry Has an IRS Problem

May 11, 2015 by John Hollon Leave a Comment

I never cease to be amazed how the mainstream media is breathlessly “discovering” the major hurdles that the Cannabis Industry has been struggling with for years.

Here’s what I mean: Just this last weekend, The New York Times, America’s newspaper of record, published a story headlined Legal Marijuana Faces Another Federal Hurdle: Taxes. In it, The Times reveals that — guess what? — that marijuana entrepreneurs have a problem with the IRS.

Of course, it never hurts to let the larger population that hasn’t been particularly focused on issues the Cannabis Industry faces know what some of those giant issues are, but at the same time, it’s a little galling that it’s taken mainstream publications such as The New York Times so long to finally figure out that, yep, the federal government makes it really hard for marijuana businesses to operate no matter what their state laws might say.

Here’s the crux of The Times story;

The country’s rapidly growing marijuana industry has a tax problem. Even as more states embrace legal marijuana, shops say they are being forced to pay crippling federal income taxes because of a decades-old law aimed at preventing drug dealers from claiming their smuggling costs and couriers as business expenses on their tax returns.

The issue reveals a growing chasm between the 23 states, plus the District of Columbia, that allow medical or recreational marijuana and the federal bureaucracy, which includes national forests in Colorado where possession is a federal crime, federally regulated banks that turn away marijuana businesses and the halls of the IRS.

Congress passed that law in 1982 after a cocaine and methamphetamine dealer in Minneapolis who had been jailed on drug charges went to tax court to argue that the money he spent on travel, phone calls, packaging and even a small scale should be considered tax write-offs. The provision, still enforced by the I.R.S., bans all tax credits and deductions from “the illegal trafficking in drugs.”

The fact of the matter is that the Cannabis Industry today is sexy and interesting, and the huge sea change in attitudes about marijuana, along with so many states jumping on the legalization bandwagon, has made publications like The New York Times finally sit up and pay attention.

And, given that The Times pretty much sets the news agenda for the entire nation (along with The Washington Post and The Wall Street Journal), an NYT story is guaranteed to get more attention among people who can actually do something about the Cannabis Industry’s IRS problem.

But, it’s also a little irritating that the tone of these stories is along the lines of “wow, look at the big news that we just discovered,” and of course, that just means these publications would have “discovered” it a lot sooner had they just been interested and actually looking.

Better late than never I suppose. The Times has, over the past few months, “discovered” that the Cannabis Industry had both banking and IRS problems. With the spotlight on the IRS and the outrageous taxes for marijuana businesses, maybe their discovery” of this latest problem will finally get Congress to buckle down and do something about it.

Filed Under: Policy & Legal, Uncategorized

jhollon@fullerton.edu'

About John Hollon

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