Tag: Cannabis Industry

Cannabis Taxes Help Local Businesses and Residents During Coronavirus Crisis

Cannabis sales and tax revenue numbers are one of the few bright spots within an American economy that is reeling from the impacts of the coronavirus pandemic. When you support craft cannabis boutiques like Kind Leaf, you are helping support your local community in many ways, from providing jobs to your neighbors to helping fund various social programs that benefit your city, county, and state.

Unfortunately, the global health crisis has caused an economic collapse unlike anything that we’ve seen since the Great Depression. While many industries wonder how they are going to survive, cannabis commerce appear poised to remain strong. As government’s look for solutions, utilizing cannabis tax revenue effectively should be a part of any sensible policy proposal. Trinidad, Colorado, implemented a rainy day fund to assist local businesses and residents, a program that should be an example for other governments to follow, as Westword reports:

The southern Colorado town, fewer than fifteen miles from the New Mexico border, has used $100,000 in marijuana tax revenue from Trinidad’s 25 dispensaries to provide utility stipends for residents, as well as $300,000 for rent and utility relief for local businesses and $100,000 for extra funding split between the town’s hospital and the Las Animas County Health Department to fight COVID-19.

Trinidad economic development coordinator Wally Wallace says that one-third of local marijuana tax revenue is set aside for a “rainy-day fund,” which has been flush over the last several years. After COVID-19 spread across Colorado, Trinidad staffers feared that a drop in tax revenue during the first quarter of 2020 was inevitable — but Trinidad dispensaries broke a sales record during that period, putting $853,000 in tax revenue at the city’s disposal right after statewide stay-home orders were implemented.

“We’ve been setting aside money for that rainy-day fund for a while, which has been fantastic. When COVID-19 came in, we were trying to figure out how to react and help our local businesses while the federal and state governments were still trying to do the same,” Wallace says. “We understand this pandemic is still going on, and we still might see some drastic changes. People maybe were panic buying early on, but that being said, we’re still shocked about the lines outside of dispensaries right now.”

Over 100 neighborhood businesses have been assisted by the relief fund and local residents can apply for up to $250 for help making utility payments during these trying times. As circumstances change over time, cities and states should adapt to various needs and be flexible with cannabis tax revenue. Of course, these officials should be doing all that they can to help the cannabis industry thrive, including adding their voices and resources to federal lobbying efforts around fair banking and tax laws.

When you shop at Kind Leaf, you get to select from the biggest and best selection in the Great Northwest AND you’re helping a small business that truly benefits the local community.

Oregon Attorney General Joins Bipartisan Coalition Urging Cannabis Banking Access

It is rather incredible that cannabis businesses keep breaking sales records (two months in a row in Oregon!) with so many regulatory obstacles put in their way. Local, state, and federal laws and rules stifle cannabis entrepreneurs unlike any other industry, yet the hardworking folks keep the Mary Jane train chugging along.

The lack of access to normal banking services is one of the most burdensome prohibitions, hindering not only cannabis businesses, but also everyone that they conduct business with, from their landlord to their insurance company to their attorney. Additionally, forcing businesses to be cash only is a danger to our communities.

Thankfully, common sense banking reform could be on the horizon with the U.S. House passing a coronavirus relief bill that includes the SAFE cannabis banking act. In addition to a majority of federal representatives supporting cannabis banking access, a supermajority of state attorneys general are urging Uncle Sam pass the SAFE Act. Oregon Attorney General Ellen Rosenblum joins 33 other AGs, forming a formidable bipartisan alliance. Marijuana Moment reported:

First, the public safety threat of operating on a largely cash-only basis has been exacerbated amid the crisis. Second, large cash transactions “places law enforcement, tax regulators, consumers, and patients at heightened risk of exposure to the virus.” Third, access to financial institutions would make it easier to collect tax revenue from marijuana sales, which is particularly needed to offset economic shortfalls due to the health crisis.

“The current predicament of a rapidly expanding national marketplace without access to the national banking systems has resulted in an untenable situation,” the officials wrote. “We stress that current legislative models are available to fix this situation.”

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The letter goes on to say that passing the Secure and Fair Enforcement (SAFE) Banking Act as part of coronavirus relief legislation would not represent an endorsement of cannabis legalization by Congress. “Rather, it reflects a recognition of the realities on the ground and an embrace of our federalist system of government that is flexible enough to accommodate divergent state approaches,” they said.

As usual for the cannabis community, passing the SAFE Act won’t be easy as passage in the Senate faces many hurdles. However, the progress that we’ve made among politicans and top law enforcement officers across the nation and political spectrum, bode well for the future of the movement and industry.

You can read the entire letter from the 34 attorneys general here.

Credit Unions Join the Call for Cannabis Industry Coronavirus Assistance

The cannabis industry has become too intertwined within our society and economy to continue this second-class treatment of lacking access to banking and other services that are available to other business sectors, even those not deemed as “essential” to our local economies. Essential cannabis workers are risking their lives like grocery clerks and other crucial employees keeping some semblance of our economy going and it’s past time that they start getting treated with some type of fairness. Of course, cannabis trade groups have been clamoring for some equality, but now, credit unions are joining the fray, in another step forward for the burgeoning industry.

Marijuana Moment reported:

In a letter to congressional leaders on Tuesday, the American Trade Association for Cannabis and Hemp (ATACH), Policy Center for Public Health and Safety and 28 partnering groups and financial institutions noted that the marijuana industry and ancillary businesses that work with state-legal cannabis markets are specifically excluded from loans and lending programs provided for under several packages of COVID-19 legislation that have been approved.

To that end, the coalition made two recommendations: 1) issue pandemic relief block grants for states to decide on their own how to allocate the funds or 2) amend current federal coronavirus aid eligibility requirements to allow cannabis businesses to get funds that are available to other companies.

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“The decision to bar the legal cannabis industry from these relief programs not only harms the longevity of the industry but also the hardworking Americans who rely on the industry for their livelihood,” the groups wrote to congressional leaders. “Cannabis companies are good corporate citizens and readily participate in pandemic-related measures to care for their workforce such as mandatory paid sick leave and working to care for those with the virus.”

This latest push falls on the heels of a bill proposed by Oregon’s Earl Blumenauer and Colorado’s Earl Perlmutter to make cannabis industry participants eligible for relief during the coronavirus pandemic crisis. From the April 23rd press release issued by the representatives:

Reps. Blumenauer and Perlmutter Introduce Legislation to Make Cannabis Businesses Eligible for COVID-19 Relief

Washington D.C. – Today, Reps. Earl Blumenauer (OR-03) and Ed Perlmutter (CO-07) introduced legislation that would make cannabis businesses eligible for Small Businesses Administration (SBA) COVID-19 relief programs.

Currently, state-legal cannabis businesses are being left out of relief that was established to help small businesses weather the COVID-19 pandemic. Most notably, they are unable to access and participation in SBA’s loan programs—financial support that is designed to pay workers, health care benefits, and family or sick leave. This legislation would grant state-legal cannabis businesses eligibility for the Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDL), and Economic Injury Disaster Loans emergency advances.

“As Congress seeks to provide relief to small businesses across America, chief among those being left out are state-legal cannabis businesses that are essential to communities and have met the demands of this crisis,” said Rep. Blumenauer, founder and co-chair of the Congressional Cannabis Caucus. “We should include state-legal cannabis in federal COVID-19 response efforts.  Without providing these businesses the relief needed to carry out the recommended public health and worker-focused measures, we are putting these hard-working people – and ourselves – at risk.”

“Cannabis businesses are major employers and significant contributors to local economies in Colorado and across the country,” said Rep. Perlmutter (CO-07). “They should receive the same level of support as other legal, legitimate businesses and be eligible for SBA relief funds during this COVID-19 crisis.”

 Blumenauer also led a bipartisan coalition of nearly three dozen Congressmembers in calling on House leadership to ensure cannabis businesses are included in future relief efforts.

To read the full text of the bill, click here.

Virtually every industry is hurting, and even though cannabis businesses remain open in legal states during this crisis, they are impacted by required safety precautions, massive unemployment, and supply chain disruptions, like any other business sector. The difference is that cannabis companies often don’t have access to bank accounts, loans, grants, insurance, and other services available to businesses, all they while, being taxed at an exorbitant rate because of the 280e tax provision. It’s time that Congress, and our society give our essential workers the protections and tools they need to navigate this frightening phase, and the cannabis industry should be no different.

House Speaker Wisely Supports Cannabis Banking Access in Next Coronavirus Bill

The United States economy is in a freefall because of the coronavirus pandemic that has shut down many sectors of our economy and disrupted our American way of life. With over 17 million more Americans unemployed and retail sales plummeting more in March, than ever before, our nation is facing our greatest economic crisis since the Great Depression. The cannabis industry, considered an essential business sector here in Oregon, and across the nation in medical and legal states, is providing jobs, revenue, and medicinal products, but, thus far, has been locked out of the stimulus benefits available to other businesses.

Fortunately, the exclusion of cannabis businesses may change in the near future as provisions to allow cannabis businesses access to banking services may be included in an upcoming COVID-19 stimulus bill. Representative Ed Perlmutter (D-CO) has stated that  such a provision has the support of top congressional leaders, including House Speaker Nancy Pelosi (D-CA).

Marijuana Moment reported:

“I raised this very question to our caucus, to Speaker Nancy Pelosi directly last week, saying, look this is a major employer in Colorado and elsewhere around the country. They have been deemed essential services in many, many states,” Perlmutter said during the town hall call. “They cannot access any of the relief that we are providing for in any of these three packages that we have passed. She said, as did the other leadership members on the call, said she wanted to see it get passed.”

Perlmutter reiterated that the speaker supports his proposal and said the Democratic caucus will “continue to work on it over the next couple weeks as we put these additional packages together.”

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“I continue to push for the passage and enactment of the SAFE Banking Act to ensure cannabis and cannabis-related businesses can access the banking system, including access to much-needed financial assistance during times of need such as this COVID-19 pandemic,” Perlmutter told Marijuana Moment. “I’m also focused on ensuring any federal funding for state and local governments remains flexible enough so as not to exclude cannabis businesses in states where they are legal, legitimate businesses.”

Only time will tell if the cannabis industry will finally get access to the banking services that they need and deserve. It is downright shameful and hypocritical for cannabis farmers, processors, labs, and retailers to be deemed essential businesses and risk their lives during a global pandemic while being treated as second-class citizens. Banking access won’t be everything that the cannabis industry needs, but it’s a start.

 

 

 

Reform the 280e Tax Code: The Feds Should Stop Profiting off Illegal Cannabis

While the huge sales numbers in legal states make headlines, they don’t tell the real story about the cannabis industry. The macro numbers of gross profits and revenue demonstrate the potential of the industry, but hidden within record-breaking sales reports are the trials and tribulations facing small businesses and entrepreneurs. Regulatory hurdles and over taxation are extremely burdensome to the industry, but the biggest obstacle to unleashing the potential of the cannabis industry (save for prohibition) is the 280E IRS tax code that prohibits cannabis businesses from deducting normal business expenses from their federal taxes.

While giant corporations, especially multinational ones, may be able to weather their tax burden, mom and pops are surviving on very small profit margins after they pay their taxes. Rolling Stone reported on how the 280E tax code allows the United States federal government to reap billions of dollars because of cannabis’ illegality at the federal level:

Because of the discrepancy between state and federal law, legal marijuana businesses are often stuck paying twice as much as normal businesses – effective rates of up to 70 percent – in federal taxes. Exactly how much extra tax revenue makes it to the feds because of marijuana’s illegality is not entirely clear. But last December, the Congressional Joint Committee on Taxation responded to a request from Colorado Senator Cory Gardner with the projected additional amount that will be collected from legal cannabis businesses between 2018 and 2027 if the drug remains federally illegal: $5 billion.

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The federal government’s legal weed windfall can be traced back to a little tax code provision called 280E, which says that anyone trafficking in Schedule I or Schedule II drugs cannot take deductions or receive credits on their taxes. It was written in the 1980s to prevent the Scarfaces of the world from writing off the cost of packaging for methamphetamine. But now that a majority of states have legalized the medical or recreational sale of marijuana, the 280E tax provision has become a key point of contention between the federal government and state-legal businesses.

So where did the Joint Committee on Taxation’s numbers come from? Several marijuana industry groups have done their own estimates of 280E’s impact, but the numbers that seem closest to what the JCT put out were developed by a Washington D.C. economic research firm hired by Tom Rodgers, a Native-American advocate and lobbyist. About 15 years ago, Rodgers was the whistleblower in the infamous Jack Abramoff case, helping authorities to uncover criminal lobbying and bribery activities that ultimately led to convictions for 21 people, including a congressman and two former Bush White House officials. These days, Rodgers has expanded his oeuvre to include some work on behalf of the cannabis industry. In 2016, in conjunction with a chain of Colorado marijuana dispensaries called the Green Solution, Rodgers commissioned the research firm to develop an analysis of 280E in the hopes of ultimately getting the provision repealed.

While we’ve seen cannabis legalization gain popularity, political support has also increased. We’ve seen Congress pass protections from federal arrest and prosecution for medical providers and the House has passed protections for adult-use businesses and banking services (but the Senate needs to catch up). Eventually, we’ll see some movement on the 280E tax code. Hopefully soon, Uncle Sam will stop profiting from keeping cannabis illegal and give the hard-working members of the cannabis industry, the same tax deductions that other businesses enjoy. If the cannabis community will make a point to support locally-owned cannabis boutiques like Kind Leaf, that money will flow back into local communities, where that green can do the most good.

U.S. Treasury Secretary Tells Congress to Deal with Cannabis Banking Issues

As cannabis legalization has moved more mainstream, we have seen more and more progress at the federal level, but much-needed reforms are moving entirely too slowly, especially for those operating businesses that could use normal banking services and tax policies. With support across demographics, it can be extremely frustrating to the cannabis community and industry to see bills stalled, such as the SAFE Banking Act that managed to pass the House, but still awaits a Senate hearing. It appears that you can add Trump Treasury Secretary Steve Mnuchin to the list of those growing irritated with Congress as he told congressional members how the lack of banking services is impacting the IRS, as The Hill reported:

“This creates significant problems for the IRS,” Mnuchin said at a hearing held by a House Appropriations subcommittee.

Many states have legalized medical or recreational marijuana. However, banks have been hesitant to serve marijuana businesses even in states that have legalized use of the drug because they want to avoid violating federal anti-money laundering and illicit finance laws. That has led to cash-only marijuana businesses.

Without taking a stance on how he thinks the federal-state conflict concerning marijuana should be resolved, Mnuchin urged Congress “to deal with this one way or another.”

As The Hill noted, Idaho Republican Senator Mike Crapo is an obstacle to passing sensible cannabis banking legislation in the Senate. Spread the word and make sure that he hears from plenty of people, especially his constituents.

 

 

 

Oregon Creates More Cannabis Jobs While California Suffers Losses

Legalizing and regulating cannabis has many economic and societal benefits as bringing cannabis out of the illegal market creates jobs, generates revenue and decreases harmful arrests, prosecutions, and jailings. It isn’t all happy unicorns and rainbows for the burgeoning industry however as overregulation and over taxation still hinder hard-working entrepreneurs’ ability to fully unleash the potential of the market, especially the federal 280e tax code that prevents the deduction of normal business expenses. The dastardly 280e tax code hits retailers the hardest, especially small businesses, so please support craft cannabis boutiques like Kind Leaf as much as you can.

Cannabis commerce has been implemented in several ways and it is difficult to get all of the details correct, especially while cannabis remains illegal under federal law. Some states have limited licenses while others, namely Oregon, initially set up system with relatively low barriers to entry, to bring in as many people into the regulated market as possible.

Opening up the cannabis industry to as many licensees as possible has been great for consumers, bringing prices down, but the competition has made making profits difficult. Oregon regulators eventually started limiting cultivating licenses, but with so many actors already in the market, the Beaver State still has low cannabis prices.

While Oregon certainly hasn’t gotten everything right, I think that it is safe to say that the state has done a better job than California. Oregon’s Southern Neighbor, unfortunately has been too slow to issue licenses and taxes definitely too damn high. As Jefferson Public Radio reports, the two states’ different methods have led to job markets going in the opposite direction as the Oregon cannabis industry continues to grow while California’s cannabis jobs actually decreased:

Although recreational marijuana has been legal in Oregon for about six years, the industry continues to see job growth. Meanwhile, California’s marijuana job numbers decreased in 2019.

That’s according to a new report by Leafly, a Seattle-based cannabis publication and phone app, which recorded a 20 percent increase in marijuana industry jobs in Oregon last year.

Leafly uses state data and market sizes to estimate the number of full-time equivalent jobs in the legal marijuana industry — including farmers, trimmers, and botanists, as well as administrative staff. It doesn’t include workers who primarily work with hemp or CBD products.

Oregon, with 18,200 industry jobs, experienced a 20% increase while California, with 39,800 jobs, suffered 8,000 job losses. Leafly’s report pointed to local California regulations, especially with 2/3 of localities banning retail businesses as the culprit. Also, compared to Oregon’s maximum 20% tax rate, California’s cannabis taxes, which can range between 45% to 80% depending on your product and locality, is just too damn high.

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Legal Cannabis Benefits Other Businesses

While cannabis entrepreneurs face many obstacles generating big profit margins, thanks to over regulation and excessive taxes, the economic benefits are easy to see. Legal cannabis creates industry jobs and generate tax revenue that benefits state programs. However, the initial job and money numbers don’t reflect the true value that the cannabis industry brings to their communities as ancillary businesses also benefit.

Consultants, lawyers, contractors, architects, and others are employed to help set up the businesses, for instance. Accountants, human resource specialists, public relations experts, are also often needed. The list goes on and on and we now have some proof as to the scope of the economic benefits from a new study that has some very interesting results. Marijuana Moment got a sneak peek of the study:

To investigate the impact legalization has on the economy, researchers at the University of Iowa analyzed 9,810 corporations between 1991 and 2017, finding “a multitude of positive effects” after a state enacts medical marijuana laws.

“Firms headquartered in marijuana-legalizing states receive higher market valuations, earn higher abnormal stock returns, improve employee productivity, and increase innovation,” the authors said.

The study, which was reviewed by Marijuana Moment but has yet to be published, found that having cannabis laws on the books can unleash the previously untapped potential of employees and helps companies attract new talent.

The cannabis community shatters stereotypes one by one, virtually every single day. The more that the truth is revealed and the benefits of cannabis legalization are revealed, we move closer and closer to true freedom and equality. Once we get our regulations and tax code on track, we will be able to fully unleash the full potential of the plant.

United States Government Collects Billions from Cannabis Businesses, Time to Treat them Fairly

The cannabis community and industry has made some great achievements in recent years, thanks to a ton of hard work by advocates and entrepreneurs. While those of us in the trenches can take pride in ending harmful arrests and helping generate revenue for our communities, it can be a bit frustrating when so many people think that political change is inevitable and that making a living in the cannabis industry is easy.

The truth of the matter is that we have improved our cannabis laws thanks to decades of hard work and sacrifices by a lot of people, many of whom haven’t lived to see the fruits of their labor. People that don’t know folks directly involved in the cannabis industry, are often under the impression that retailers, processors, and growers are just raking in big bucks; they have no idea the amount of work it takes to just stay afloat, let alone make a decent profit. Cannabis industry entrepreneurs are shattering the “lazy stoner” stereotypes by putting in long hours and sacrificing so much to forge their own American Dream.

Unfortunately, hard working business people are trying to earn a living with one hand tied behind their backs as they are often prevented from having access to ordinary banking services and they are taxed at an exorbitant rate thanks to the 280e IRS tax code as Quartz reported:

Although marijuana is illegal under federal law, cannabis businesses in the United States still pay federal taxes on gross income. They are not allowed any deductions or credits for business expenses, by law, which can mean an effective federal tax rate as high as 90%.

The US government collected an estimated $4.7 billion in taxes from cannabis companies in 2017 on nearly $13 billion in revenue. Unlike most American businesses, which pay electronically or by check, most of these marijuana firms are unbanked and were forced to pay their federal taxes in cash, something the IRS is still trying to get a handle on.

Change will eventually come, thanks to many people putting in a ton of work, but reforms really can’t come fast enough. A banking bill has a chance to pass Congress this year, but it’ll take the cannabis community and their supporters to step up and demand change. You can help by contacting your United States Senators. If you are an Idaho voter, please let Senator Mike Crapo know how much you support legalizing normal banking services for state-regulated cannabis businesses. People’s livelihoods literally depend upon it.

It’s Time for Cannabis Careers to Get the Respect that They Deserve

The media loves loves love reporting on the big sales and tax revenue numbers that legal cannabis businesses generate. They don’t do as good of a job demonstrating the full economic benefit that regulated cannabis commerce has brought to states across the nation, and outlets often can’t resist having some time of punny headline about “Smoking Sales Expectations” or “The Green Rush” and our society of large certainly doesn’t give the proper amount of respect to the cannabis community and the hardworking folks operating small businesses.

Most people have zero clue the amount of work that goes into making a living in the industry or that the lack of banking access and other regulatory headaches hinder the livelihood of workers throughout the industry, not just dispensaries, cultivators, and processors. Hopefully, that will change over time as people become more educated and cannabis moves more mainstream.

Writing for Green Entrepreneur, Grup Flor’s Gavin Kogan, makes some excellent points:

“Cannabis professional” not an oxymoron. There’s perhaps no other industry in modern history that is so multi-faceted, requiring some level of knowledge or expertise across so many different disciplines. After all, we are creating an entire industry from one end of the supply chain to the other, entirely from scratch. From the agricultural issues of cultivation to the engineering aspects of manufacturing to the legal and regulatory requirements surrounding local consumer shops, cannabis requires the business acumen so common in more traditional industries

According to ArcView Market Research, the cannabis industry will employ well over 400,000 people in the US by 2021. By conservative estimates, there are already 211,000 cannabis jobs across the United States now, of which 64,000 were added just in 2018. As more states legalize cannabis, employment needs and opportunities will grow exponentially.

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As parents, educators and business owners, let’s legitimize cannabis as a serious career path for those eager to learn and join such a dynamic industry. It’s time to put the stigma of the product behind us and appreciate the impact cannabis is, and will, have on our economy.

Slowly but surely, we are debunking so many myths about cannabis and people that utilize the plant, but that slow progress can be so frustrating. I often wonder if those working in the beer, wine, and liquor industries suffered similar stigmatization after federal alcohol prohibition was repealed or if changing the law across the land helped legitimize their career paths.

Recently, I attended a hearing of the Oregon Liquor Control Commission (OLCC), the agency that regulates both alcohol and cannabis in the Beaver State. It is easy to see that cannabis is still considered second fiddle to alcohol, even though cannabis generates more tax revenue than beer and wine for the state by far. I was envious of the respect that OLCC Commissioners gave representatives of liquor distributors and small wineries and left motivated to help ensure that the cannabis community and industry achieves the respect and recognition that we deserve. Step by step, we’re gonna get there.