You think your taxes are high?
For medical marijuana dispensaries in the United States, they can be stratospheric. Cannabis retailers face an effective tax rate of up to 85 percent, and that won’t be reduced by the new tax law.
Most mainstream businesses pay effective tax rates of about 15 percent to 30 percent.
“It’s a burden,” said Chris Visco, co-owner of TerraVida Holistic Centers, which opened one of Pennsylvania’s first medicinal cannabis shops on Feb. 17 in Sellersville. “People think that we’re getting rich. It’s really not the case. The profit margins are going to be really narrow after taxes. And you have to still pay local and state taxes.”
Rent, salaries, utilities, and insurance are among the expenses any other business can write off on their federal taxes. None of those deductions is available to cannabis dispensaries.
WILLIAM THOMAS CAIN
Some of the items for sale at TerraVida Holistic Center, which is one of the first medical marijuana dispensary’s in Pennsylvania to open Saturday, February 17, 2018 in Sellersville, Pennsylvania.
Even other illegal enterprises can write off expenses related to overhead.
“Prostitutes and brothels, for instance, can write off their costs of doing business,” Benda said.
But not marijuana dispensaries, thanks to Section 280E in the IRS tax code. Congress created it at the height of the War on Drugs to target illegal drug traffickers. It prohibits any business that sells Schedule 1 substances from taking deductions or credits.
In 1974, police busted a petty coke, dope and amphetamine dealer in Minneapolis. After Jeffrey