Week in Review: Bill to Stop IRS Assault on MMJ Faces Long Odds + Skepticism Over Cannabis Plans

Image for wrapup of medical marijuana news

Last week, Medical Marijuana Business Daily wrote about how a federal lawmaker is planning to introduce legislation that would prevent the Internal Revenue Service from making life exceedingly difficult for medical marijuana dispensaries.

Under the proposal – called the Small Business Tax Equity Act of 2013 – the IRS could no longer invoke the so-called 280e provision in the US tax code to bar state-legal cannabis companies from deducting common business expenses such as payroll and rent. Congressman Earl Blumenauer (D-Oregon) reportedly plans to introduce the bill this week.

It’s an important move for several reasons: The bill elevates the discussion among those who have the power to change the situation, gets the issue in front of the public and lets cannabis professionals know that someone is in their corner.

But that might be about all the measure does, as its chances of passage are slim-to-none barring a miracle.

Hank Levy, a well-known accountant serving the MMJ industry, summed it up best: “This just isn’t a very important issue” for lawmakers, he said, adding that “I just don’t think it’s on the radar of anybody.”

Indeed, with all that’s going on federally – and with the inability of Congress to pass anything these days – it would be surprising if the bill even gets a hearing.

The only way it might gain traction, some say, is if it’s lumped in with a larger IRS or tax overhaul – something that has a lot of support in the Republican-controlled House.

InStoryEastCoastSeminarAdStill, the medical marijuana community should temper its expectations, as this could be a major problem for the industry well into the future. That means dispensaries will continue to take a bigger tax hit than virtually every other type of business in the United States, making it harder to cover costs, earn a profit and – ultimately – stay in business. This can be one of the most difficult aspects of running an MMJ operation, particularly for owners who weren’t aware of the tax issue before entering the industry. Entrepreneurs thinking about starting a medical or recreational marijuana operation should be particularly aware of this challenge, as it could make or break their business.

Also last week, Medical Marijuana Business Daily wrote about the grand plans of Jamen Shively, a former Microsoft executive who wants to create a national chain of cannabis stores. The goal is laudable, and it’s good to see some prominent professionals from other industries trying to help the cannabis business mature and grow.

But the strategy seems grossly out-of-touch with the realities of the industry and strikes some as exactly what you’d expect from an outsider who has not done their due diligence on the unique challenges and limitations of the cannabis business. Perhaps Shively will prove all his skeptics wrong, but at this point it’s easy to poke holes in his plan (from legal, financial, operational and other perspectives). Shively has also revealed little in the way of specifics or addressed how he will navigate around these significant hurdles, so it’s unclear exactly what his plan entails.

A truly national cannabis brand – at least one involved in actually selling marijuana, rather than ancillary products and services – likely won’t develop until we see some real change in federal laws that make such a business possible.

Other top stories in MMJ Business Daily:

Moratoriums, Bans Could Dampen Recreational Cannabis Market in Colorado

Q1 Financial Reports Highlight Challenges Facing Publicly Traded Marijuana Companies

Guest Column:  Marketing Conundrum for CO, WA Medical Cannabis Businesses

3 comments on “Week in Review: Bill to Stop IRS Assault on MMJ Faces Long Odds + Skepticism Over Cannabis Plans
  1. Jeremy Anderson on

    What you’re saying is that it won’t pass, not that it wouldn’t make a difference even if it did pass. Am I missing something here?

    Reply
  2. David James on

    If a bill has lots of cosponsors, its chances of passage are much stronger. I am copying a list of cosponsors of cannabis legislation onto this note:
    Making changes through Congress could be equated to building a house with a tack hammer. It’s a long, slow process and the end result may have little resemblance to the original design. A key factor in moving a bill through Congress is obtaining lots of cosponsors. If a bill is in a committee and the committee chair doesn’t see a lot of cosponsors for the bill, that chairperson might think that the bill has little support and the bill would divert committee attention from other more important bills. So the bill would quite likely die in committee without ever seeing any action in the House or the Senate.
    Rep. Dana Rohrabacher (R-Ca48) has introduced H.R.1523 to the House of Representatives. This bill, known as the “Respect State Marijuana Laws Act of 2013”, would amend the Controlled Substances Act so that the provisions of that act regarding marijuana would not apply to citizens of states which have recognized the rights of marijuana consumers and changed their laws regarding marijuana. The wording of the bill is as follows: “Notwithstanding any other provision of law, the provisions of this subchapter related to marijuana shall not apply to any person acting in compliance with State laws relating to the production, possession, distribution, dispensation, administration, or delivery of marijuana.” This act would apply equally to medical marijuana states and to other states (currently Washington and Colorado)that have given their citizens greater freedom regarding the possession and use of marijuana.
    H.R.1523 is currently sitting in the House Energy and Commerce Committee and the House Judiciary Committee with 16 cosponsors. The “magic number” to move a bill out of committee I’m told is 30 cosponsors. So the bill needs at least another 14 cosponsors to have a chance of seeing action in Congress.
    Numerous bills have been introduced to the House regarding changing the laws regarding marijuana, but they all die in committee due to lack of cosponsors. I have examined these bills dating back to 2011 and have made a listing of cosponsors on these bills. These Representatives should be contacted by citizens in their respective districts and encouraged to cosponsor H.R.1523. A personal visit is the most effective way to persuade, but phone calls, letters, and emails are also effective. I have not included those who have already cosponsored H.R.1523 in this list. Nor did I duplicate names which have cosponsored two or more bills.
    H.R.784 States’ Medical Marijuana Property Rights Protection Act. Introduced Feb 15,2013 by Barbara Lee(D-Ca13)
    Eric Swalwell (D-Ca 15)
    H.R.1983: States’ Medical Marijuana Patient Protection Act introduced may 25, 2011. Died in committee
    Fortney “Pete” Stark (D-Ca 13)
    Zoe Lofgren (D Ca 16)
    Lynn Woolsey (D-Ca 6)
    Hinchey, Maurice (D-NY 22)
    Jerrold Nadler (D-NY 8)
    Bob Filner (D-Ca 51)
    Michael “Mike” Honda (D-Ca17)
    Jay Inslee (D-Wa 1)
    John Olver (D-Ma 1)
    James “Jim” McGovern (D-Ma3)
    Mike Thompson (D-Ca 1)
    Chellie Pingree (D-Me 1)
    H.R.689 States’ Medical Marijuana Patient Protection Act . Introduced Feb 14,2013 by Rep.Earl Blumenauer (D-OR 3)
    Jared Huffman (D-Ca 2)
    Eric Swalwell (D-Ca 15)
    Alan Lowenthal (D-Ca 47)
    Ed Pastor (D-Az 7)
    Peter DeFazio (D-OR 4)
    H.R.2943 Personal Use of Marijuana by Responsible Adults Act of 2009. Introduced June 18, 2009 by Rep Barney Frank. Died in committee.
    Tammy Baldwin (D-WI 2)
    Dennis Kucinich (D-OH 10)
    George Miller (D-CA 7)
    Michael Capuano (D-MA 8)
    Jim McDermott (D-WA 7)
    H.R.5842: Medical Marijuana Patient Protection Act. Introduced Apr 17,2008 by Barney Frank (D-MA 4) Died in committee.
    Lynn Woolsey (D-Ca 6)
    Bob Filner (D-CA 51)
    Shelley Berkley (D-NV 1)
    Sheila Jackson Lee (D-TX 18)
    Steven Rothman (D-NJ 9)
    Earl Blumenauer (D-OR 3)
    Barbara Lee (D-CA 9)
    Eleanor Norton (D-DC 0)
    Lacy Clay (D-MO 1)
    Henry Waxman (D-CA 30)
    H.R.1831 Industrial Hemp Farming Act of 2011 Introduced by Rep. Ronald “Ron” Paul on May 11, 2011. Died in committee.
    Keith Ellison (D-MN 5)
    Tom McClintock (R-CA 4)
    John Campbell (R-CA 48)
    Dennis “Denny” Rehlberg (R-MT 0)
    Peter Welch (D-VT 0)
    Kurt Schrader (D-OR 5)
    Collin Peterson (D-MN 7)
    Timothy Johnson (R-IL 15)
    Hansen Clarke (D-MI 13)
    Suzanne Bonamici (D-OR 1)
    Richard Hanna (R-NY 24)
    Thomas Massie (R-KY 4)
    H.R. 525 Industrial Hemp Farming Act of 2013 introduced Feb 6, 2013 by Rep Thomas Massie
    John Yarmuth (D-KY 3)
    Ted Yoho (R-FL 3)
    Todd Young (R-IN 9)
    Diana DeGette (D-CO 1)
    Kerry Bentivolio (R-MI 11)
    Steve Daines (R-MT 0)
    Steve Stockman (R-TX 36)
    Ed Perlmutter (D-CO 7)
    Trey Radel (R-FL 19)
    Kevin Cramer (R-ND 0)
    Steve Stivers (R-OH 15)
    Cory Gardner (R-CO 4)

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