Three politicians from Colorado are attempting to reform federal taxthat are costing legally-operating marijuana businesses lots of money.
The issue is Section 280E, which prevents drug sellers from purchasing expensive business-related items with cash and writing them off as a business expense, reports Westword. Exclusion from these certain tax deductions have some marijuana owners reportedly paying upwards of 70% income tax.
CEO and founder of LivWellin Colorado, John Lord, said, “It’s an issue worth being talked about. We’re trying to create jobs and make more revenue to tax, but [280E] makes a lot of that harder.”
Colorado representative Jared Polis attempted to introduce an amendment within the tax reform plan during the House Rules Committee hearing last week. The amendment would have made state-licensed marijuana businesses exempt from 280E.
Polis said, “This is a very important amendment to my state. Even though this economic activity is now legal under Colorado law and the law of many other states, and even though the people of Colorado have overwhelmingly supported this direction, our businesses in our state have been punished by enforcement of section 280E. What other business do we force to pay a 70 percent tax rate?”
Polis argued well, but the vote failed on the House floor, 3 – 8. Two Colorado senators support a Senate version of a bill that would provide a solution. Senators Cory Gardner and Michael Bennet support The Small Business Tax Equity Act of 2017. Senator Ron Wyden of Oregon introduced the Act.
Senator Wyden’s proposal indicates that state-licensed marijuana businesses would be exempt from “the prohibition against allowing business-related tax credits or deductions for expenditures in connection with trafficking in controlled substances.”
Wyden’s bill has been circulating since March, but Senator Gardner was added as a co-sponsor just last week.
Gardner said, “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. It’s time for the federal government to allow Colorado businesses to compete.”
Senator Bennet also wants to see marijuana businesses gain access to financial institutions. He wrote a letter to the Board of Governors of the Federal Reserve System asking for guidance for those financial institutions that wish to work with legally operating marijuana businesses.