It has been another year and the burdensome tax code 280E is still devastating the Colorado marijuana industry. The Biden administration teased a repeal earlier this year but it has still not come to fruition. For those not in the know, 280E effectively classifies marijuana businesses in the same bracket as an illegal street dealer, with no tax breaks or write-offs. This places cannabis companies in the difficult position of never being able to write off business expenses or have tax dedications.
Coupled with the decreasing sales, and falling prices, Colorado's cannabis industry has been hit hard. They are not alone, many states are facing a crisis. It is not just falling sales, it is faltering tax revenues that threaten school programs and general budgets.
Colorado's legal cannabis industry is celebrating its 10th birthday this year, having been legalized in 2014, but the federal government still treats marijuana sales as an illegal income source. Fortunately, and very recently, the Colorado state government has decided to tax and regulate the industry instead of forcing it further underground. The idea of taxing and regulating what people are already purchasing sent shockwaves throughout the nation, and, many states followed this path. This has resulted in collecting $2.7 billion in taxes over the last decade for Colorado alone. Instead of street dealers pocketing money, marijuana has actually helped fund some of the programs Coloradoans are so proud of. Generally, cannabis taxes go towards education programs, with the remainder placed in the general fund.
However, one major stumbling block remains in place by the federal government, always notoriously slow to act — Tax Code 280E. 280E reads as follows: "No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in a controlled substance." This classification is one of the major burdens that marijuana industry experts have shared with Yellow Scene Magazine.
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