Tag: Cannabis Industry

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.

Just Say No to Higher Cannabis Taxes

Operating a licensed and regulated cannabis business is an extremely tough endeavor. After working towards drug policy reform for about 20 years before living in a state with legal cannabis commerce among all adults, I have received a crash course in the last four years about the ins and outs of running a cannabis business from clients, friends, and regulators. The truth of the matter is that profiting from legal cannabis sales is an extremely difficult task because of regulatory hurdles and tax burdens. The federal 280e tax code that prohibits cannabis entrepreneurs from deducting normal business expenses (rent, payroll, etc.) is the most damaging. High (I know, pun intended) taxes on cannabis are another serious barrier, making prices unaffordable for those with lower incomes, and encouraging people to shop on the illicit market.

California, already hurting businesses with a heavy tax burden, are raising taxes even further. The Golden States should reverse course, and other states should not follow suit, they should look to go in the opposite direction and keep taxes law to benefit local businesses and allow the regulated market to keep pace with the prices in the unregulated economy. The San Jose Spotlight reported on the tax hike:

The California Department of Tax and Fee Administration “stunned and outraged” the business side of California’s cannabis market when it announced in November that taxes would go up in January, the California Cannabis Industry Association said in a statement.

The association said California adding more taxes, as the state’s nascent recreational cannabis market “spirals towards collapse” would “drive consumers to the illicit market at a time when illicit products are demonstrably putting people’s lives at risk.”

California collects a 15% excise tax from cannabis consumers and San Jose collects an additional 10%. Every transaction also includes a sales tax that is at least the 9.25% charged by the state on all consumer transactions and maybe more when cities and counties have their own sales taxes. Those rates will remain the same in 2020, but retailers will face a 12.5% bump in taxes and farmers will see an increase of more than 4%.

Like many consumers, the cannabis community is very price conscious. Further, cannabis consumers are comprised of many patients on limited incomes and with plenty of people that know how to acquire flower and other products through underground connections. Too heavy of a tax burden will disproportionately hurt sick and disabled patients and mom-and-pops, as the wealthy and multinational companies can easily handle price increases.

Keeping taxes low will better help everyday citizens and the small businesses that truly power and invest in our local communities and neighborhoods. California was the first state to legalize medical cannabis and I’m pleased that they helped show the way, but let’s not follow the state’s example on taxes, unfortunately, as the Golden State is going completely in the wrong direction.

Legal Cannabis Retailers Doing a Great Job Preventing Sales to Minors

Reefer Madness fear mongering has been a staple of prohibitionists for decades, but the truth about cannabis has been debunking each myth one by one. The fear tactics originally started with outrageous claims, like folks turning deranged, that a basic understanding of the plant and those that utilize it revealed that the stories were nonsense. The denial of medicinal properties has melted away as a majority of states legalized medical use and predictions of highway carnage have proven to be false as well.

The fact that regulated cannabis would do a better job of preventing sales to minors than the illicit market would take some studying, and now, the results are coming in, and legal retail outlets are indeed checking identification and turning away underage would-be buyers. A recent study published in the Journal of Studies on Alcohol and Drugs found that cannabis retailers in Washington and Colorado, the first two states that legalized cannabis commerce to all adults, did a better job than alcohol establishments of denying purchases by those underage. Washington State retailers denied those under 21 86.6% of the time, while Colorado stopped minors 92.6% of the time. Marijuana Moment reported on the study:

The authors highlight that “refusal rates exceeded those for alcohol and are similar to those for tobacco.” In other words, the policies and regulations of the cannabis industry in Colorado and Washington could be used as potential models for other states looking to legalize recreational marijuana sales.

The findings are comparable to a sting operation conducted by Oregon regulators last year that showed a 100 percent compliance rate by licensed marijuana stores in not selling to underage individuals.

According to the new Colorado and Washington study, when it comes to cannabis, “regulators in both states worked with the industry, performed compliance checks, and penalized stores that failed.”

Those in the cannabis industry have a huge interest in ensuring that cannabis stays out of the hands of those under the age of 21 as minors’ brains are still developing and noncompliance with identification checks will lead to a backlash against legalization. Licensed and regulated cannabis retail outlets should be commended for their efforts in checking IDs and preventing sales to minors, helping prove, once again, that legalization is a better policy than prohibition.

Cannabis Community Must Rally to Pass Banking Bill in the U.S. Senate

Those thinking that the cannabis industry is a get-quick-rich plan are most likely to be severely disappointed. A long list of obstacles hinder cannabis businesses from over regulation to over taxation, at all levels of government. The lack of access to banking services is one major hurdle for hard working entrepreneurs that are foundational pioneers in the burgeoning industry. The lack of a bank account poses enough problems, but without the business loans and other programs available to other industries, growth is severely stifled.

Thanks to the diligence of advocates, we won a major victory by passing the Secure and Fair Enforcement (SAFE) Act at the United States House this year, but unfortunately the much-needed banking bill faces a tough path in the Senate. Passage in the Senate will take a strong lobbying effort by the cannabis community after Idaho Senator Mike Crapo, while open to passing banking legislation, announced his opposition to the SAFE banking Act, as Marijuana Moment reported:

A powerful Senate committee chairman said on Wednesday the he opposes House-passed marijuana banking legislation and laid out potential changes he would like to see to the bill before he takes it up in his panel.

Among other amendments being floated for public feedback is a 2 percent THC potency limit on products in order for cannabis businesses to qualify to access financial services as well as blocking banking services for operators that sell high-potency vaping devices or edibles that could appeal to children.

“I remain firmly opposed to efforts to legalize marijuana on the federal level, and I am opposed to legalization in the State of Idaho,” Sen. Mike Crapo (R-ID), who chairs the Senate Banking Committee, said in a press release. “I also do not support the SAFE Banking Act that passed in the House of Representatives. I have significant concerns that the SAFE Banking Act does not address the high level potency of marijuana, marketing tactics to children, lack of research on marijuana’s effects, and the need to prevent bad actors and cartels from using the banks to disguise ill-gotten cash to launder money into the financial system. I welcome input from all interested parties on how to thoughtfully address these concerns.”

Regardless of one’s stance on cannabis legalization, everyone should support banking access for industry participants. The SAFE Banking Act will help businesses grow, creating more jobs and generating more revenue. Public safety and prompt tax payments will also improve if banking services are fully legalized. The lack of banking services hurts small and medium businesses the most and these mom-and-pops and craft cannabis boutiques need our support, both with our dollars and our political activism.

The future of the cannabis industry depends upon our community shopping with local companies and urging our elected officials, especially United States Senators, to treat the industry like any other business sector. It certainly seems like Idahoans need to contact Senator Crapo and it is imperative that we make our voices heard. We’ve come a long way, we just need to remain vigilant and keep making progress for the cannabis community step by step, piece by piece, law by law.

LaRain Miller of Kind Leaf wins National Budtender Award

Las VegasThe first annual Budtender Awards took place at the Mandalay Bay Resort & Casino in sunny Las Vegas, Nevada. The Budtender Awards team developed 9 unique award categories referred to as the OG Awards.

Each category hosted five finalists. These five individuals were selected from over 700 international nominees! Finalists were announced August 30th on High Times’ 420 Live Instagram show.

These Award Winners were chosen by industry experts & members of the Budtender Awards team based upon a variety of factors such as votes earned, participation and social media blasts. The winners were announced at the Award Show on October 12th, 2019 at Light Nightclub.

LaRain Miller accepting her award from “Modest Jones” & “Wolfie”

LaRain Miller of Kind Leaf Pendleton won the first ever National Budtender Awards trophy for the “Dazed & Infused” category.

According to the Budtender Awards, “This Budtender is the Martha Stewart, or Emeril of Edibles. Their sophistication and superior knowledge ranging from infusing pastries & sweets to drinks to oils & butters, gives them the skills to recommend the perfect product for every user. Who knows, maybe they’ll be the next Michelin star cannabis Chef. “

BUDTENDER

| ˈbudˌtendər |

An award winning budtender is a person who recreates and redefines the public perception of someone who works in a dispensary or store where medical or recreational cannabis is sold. Helping provide a perspective that these knowledgeable individuals are not just “Drug Dealers.”

Cannabis Flower at Kind Leaf in Pendleton, Oregon

Increasingly, this subculture is evolving into a group of educated professionals who have developed their unique blend of personality, style, fashion, and most importantly, their recommendations to an constantly growing and changing variety of cannabis offerings. Budtenders are educators, advisors, sales professionals and often a trusted resource or friend to their customers.

Kind Leaf Budtender weighing out Cannabis for a customer

Without Budtenders, Cannabis brands do not succeed, the customers are left unaware of what makes each product and brand different from the one resting next to it on the shelf. Budtenders are one of the most important factors in public relations between communities, dispensaries and the cannabis industry as a whole.

The 2019 Budtender Awards honored these individuals, promoted their efforts and acknowledged their influence on the industry, and in the communities they serve.

Congratulations to LaRain Miller, Kind Leaf for bringing home an award, for yourself, your team, your community and Oregon!

#BeKind

Kind Leaf
1733 SW Court Ave
Pendleton, Oregon
(541) 612-8588
http://www.kindleafpendleton.com