Missourians voted to legalize medical marijuana in 2018. But under federal law, growing, transporting or selling marijuana remains a crime.

Unsurprisingly, that dynamic has created a lot of headaches for the fledgling industry.

One notable example: Unlike every other legal business in the state, marijuana companies are prohibited from deducting business expenses on their taxes.

“Can you imagine as a small business owner if you were not able deduct common business expenses on your tax returns?” Sen. Denny Hoskins, R-Warrensburg, said during a Senate hearing earlier this year. “If you couldn’t deduct these expenses, it would increase your taxes significantly.”

Missouri lawmakers took a step toward easing some of that burden during the recently concluded legislative session. While federal law remains unchanged, a bill allowing medical marijuana companies to deduct ordinary and necessary business expenses on their state tax returns won near unanimous approval and was sent to the governor.

The bill now awaits Gov. Mike Parson’s signature of veto.

For federal income tax purposes, a section of the tax code prohibits deductions for expenses incurred while operating “any trade or business…that consists of trafficking controlled substances.”

Marijuana is a Schedule I controlled substance, and the IRS uses that provision to disallow cannabis businesses from deducting business expenses. [Read more at St. Louis Public Radio]