slimvictor
Bluelight Crew
Marijuana is legal to buy in several states, but no law says that selling it will be free from cumbersome expense and paperwork, especially when it comes to taxation.
Sales of the drug are permitted for recreational use in just four states — Colorado, Oregon, Washington and Alaska — and the District of Columbia; 18 other states allow sales for medicinal use. But marijuana is still illegal under federal law, and that helps explain why production and sale are tightly controlled.
A record of each plant must be maintained, beginning before the seed even sprouts, and it must be updated with every significant movement or activity involving the plant, business owners and their advocates within the industry say. Once a plant is processed for consumption and reaches a store, the authorities want to get their cut.
City, county and state governments tax marijuana sales, often at rates that differ from place to place and are higher than for other products. To complicate matters further, customers typically must pay different tax rates on the substance itself, depending on whether it is intended for medical or recreational use, and yet another rate on related items, say, vintage Mr. Natural T-shirts.
“There’s definitely a great deal of regulation,” said Keith Stroup, legal counsel for the National Organization for the Reform of Marijuana Laws, known as Norml. “Most states that have legal marijuana have seed-to-sale” tracking rules. “It reflects the reality that marijuana has been illegal for 75 to 80 years.”
The reality for Derek Peterson, chief executive of Terra Tech, the first publicly traded American marijuana grower, is “a significant burden from a manpower and data-collection standpoint.”
“A lot of banks won’t serve the industry,” Mr. Peterson said. That forces him to devote extra labor to “counting and organizing dollars on a monthly basis and cash on a daily basis to avoid shrinkage and theft,” he said. “The cash-management aspect is the most difficult hurdle any of us have.”
Without access to routine banking services, just paying employees becomes problematic for marijuana businesses, said Eddie Miller, chief strategy officer at GreenRush.com, an online delivery platform offering products from about 180 marijuana vendors. Handling the part of their salaries that employees are not paid is also difficult.
“You can’t do federal withholding” for income tax and Social Security contributions “because you can’t get a bank account,” he said. “Cannabis businesses have all the compliance that regular businesses have to follow, and they have to jump through even more hoops.”
Their tax liability is likely to be higher, too, another effect of marijuana’s dubious reputation. Certain jurisdictions tack a special-purpose tax onto the sales tax, Mr. Peterson noted. Oakland, Calif., for instance, adds 5 percent to the city’s regular 10 percent sales tax.
Just because marijuana can be sold legally in some states does not mean that Washington approves of the practice. It is still considered illegal drug trafficking under federal law, and the Internal Revenue Service taxes the industry accordingly. Section 280E of the Internal Revenue Code forbids businesses that traffic in controlled substances from deducting business expenses, apart from the cost of goods sold.
continued at
http://www.nytimes.com/2016/02/21/b...legal-but-good-luck-filing-the-paperwork.html
Sales of the drug are permitted for recreational use in just four states — Colorado, Oregon, Washington and Alaska — and the District of Columbia; 18 other states allow sales for medicinal use. But marijuana is still illegal under federal law, and that helps explain why production and sale are tightly controlled.
A record of each plant must be maintained, beginning before the seed even sprouts, and it must be updated with every significant movement or activity involving the plant, business owners and their advocates within the industry say. Once a plant is processed for consumption and reaches a store, the authorities want to get their cut.
City, county and state governments tax marijuana sales, often at rates that differ from place to place and are higher than for other products. To complicate matters further, customers typically must pay different tax rates on the substance itself, depending on whether it is intended for medical or recreational use, and yet another rate on related items, say, vintage Mr. Natural T-shirts.
“There’s definitely a great deal of regulation,” said Keith Stroup, legal counsel for the National Organization for the Reform of Marijuana Laws, known as Norml. “Most states that have legal marijuana have seed-to-sale” tracking rules. “It reflects the reality that marijuana has been illegal for 75 to 80 years.”
The reality for Derek Peterson, chief executive of Terra Tech, the first publicly traded American marijuana grower, is “a significant burden from a manpower and data-collection standpoint.”
“A lot of banks won’t serve the industry,” Mr. Peterson said. That forces him to devote extra labor to “counting and organizing dollars on a monthly basis and cash on a daily basis to avoid shrinkage and theft,” he said. “The cash-management aspect is the most difficult hurdle any of us have.”
Without access to routine banking services, just paying employees becomes problematic for marijuana businesses, said Eddie Miller, chief strategy officer at GreenRush.com, an online delivery platform offering products from about 180 marijuana vendors. Handling the part of their salaries that employees are not paid is also difficult.
“You can’t do federal withholding” for income tax and Social Security contributions “because you can’t get a bank account,” he said. “Cannabis businesses have all the compliance that regular businesses have to follow, and they have to jump through even more hoops.”
Their tax liability is likely to be higher, too, another effect of marijuana’s dubious reputation. Certain jurisdictions tack a special-purpose tax onto the sales tax, Mr. Peterson noted. Oakland, Calif., for instance, adds 5 percent to the city’s regular 10 percent sales tax.
Just because marijuana can be sold legally in some states does not mean that Washington approves of the practice. It is still considered illegal drug trafficking under federal law, and the Internal Revenue Service taxes the industry accordingly. Section 280E of the Internal Revenue Code forbids businesses that traffic in controlled substances from deducting business expenses, apart from the cost of goods sold.
continued at
http://www.nytimes.com/2016/02/21/b...legal-but-good-luck-filing-the-paperwork.html
