Ken Ford – Cultiva Law: Who Needs Cannabis Tax Revenue?
BY KEN FORD ● FEBRUARY 26, 2022 Every year, the IRS collects billions of dollars from cannabis business owners. If cannabis were federally legal and taxed, then federal tax revenue from cannabis commerce could rise to $18 billion a year. This significant speculative increase in federal tax revenue would be in spite of IRC Sec. 280E no longer applying to cannabis companies. Section 280E of the internal revenue code states that businesses “trafficking in controlled substances … prohibited by Federal law” may not deduct any expenses incurred in producing, distributing, and selling that product. The lack of the ability to deduct ordinary business expenses, wages, interest payments, etc. has made running a cannabis company three times more expensive and less profitable than any other form of business. The disallowance of deductions for cannabis companies increases their taxable income and increases the amount of federal income tax revenue received by the IRS. Does the federal government need this cannabis revenue? The United States Federal government has a trillion dollar federal operating budget; the federal tax revenue collected from cannabis companies is just a drop in that massive bucket. Most of the money collected through tax revenue is allocated to Social Security, Medicare, Medicaid, Defense and International Security. Although these are vital federal public services, most Americans are impacted more from the public services provided from the state and local communities. The Federal government still runs the country’s budget at a deficit, while many states do not (cannot). And the entitlement programs reach an exorbitant number of citizens. But couldn’t the Federal government raise even more money by “repealing” 280E and imposing a tax on cannabis operations? This will also lessen the tax burden on cannabis operations. Would cannabis tax revenue be better utilized by a state government? Cannabis tax revenue collected from within recreational cannabis states has accounted for over $10 billion dollars according to…
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Source : Ken Ford – Cultiva Law: Who Needs Cannabis Tax Revenue?
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