Ruslan Nikov’s Post

The cannabis industry is over-taxed. Here's the reality: - Studies consistently show that legal cannabis does not lead to increased youth access. - Contrary to common misconceptions, our presence does not increase crime rates. - We don't bring down home values; we revitalize dilapidated buildings and improve neighborhoods. - Cities and counties with access to legal cannabis often experience fewer opioid overdoses. Yet, despite our positive contributions, cities and states are taxing us to the brink of extinction. Excessive taxes and predatory development agreements are forcing cannabis businesses to shut down across the state. We aren't asking for special treatment—just fair treatment. It's time for policymakers to recognize the value we bring and stop treating us like a cash cow.

A report by the Minority Cannabis Business Association claims the cannabis industry could create over 50,000 jobs by 2030 if the federal government reschedules cannabis from Schedule I to Schedule III. This change would ease restrictions and lift tax burdens, like the Section 280E tax code that prohibits deductions for cannabis companies. “Our comprehensive survey and detailed economic analysis projects that rescheduling and the resulting [tax] reform would result in the creation of 55,500 jobs by 2030, generating as much as $2.7 billion in wages and $5.6 billion in new economic activity. We therefore encourage DEA to act with deliberate speed in publishing a final rule moving marijuana to schedule III.” — Statement signed by Johnson and McClary Easley, in the report #cannabisindustry #jobgrowth #cannabisnews

“Two Sets of Rules: How Tax Policies Unfairly Punish State-Legal Cannabis Operators Compared to Hemp” • IRS Targeting: State-legal marijuana businesses face rigorous IRS scrutiny, unlike hemp businesses, creating a significant disparity. • Section 280E: This tax code, aimed at illegal drug dealers, prevents cannabis businesses from taking standard business deductions, leading to much higher effective tax rates. • Hemp Loophole: Despite selling psychoactive products, hemp businesses are often not subjected to 280E, avoiding similar tax burdens. • Market Imbalance: The hemp industry, now reportedly larger than regulated marijuana, faces fewer compliance costs, widening the gap with cannabis. • Banking Limitations: Limited access to banking forces cannabis operators into cash-heavy models, compounding their compliance and logistical challenges. • Compliance Struggles: Cash-intensive business models increase the need for complex IRS filings, such as Form 8300 for large cash transactions. • Tax Payment Issues: The IRS’s cash payment system is inefficient, making timely tax payments difficult for cash-based cannabis businesses. • Lack of Guidance: Cannabis operators face inconsistent guidance on tax and accounting practices, even on basic issues like deductible expenses. • Calls for Reform: Industry experts and the AICPA suggest more equitable 280E transition rules, such as prorated application if rescheduling occurs midyear. • IRS Disconnect: Despite some IRS officials recognizing the challenges, current regulations remain rigid, adding further strain on state-legal cannabis businesses.

I think she is woefully misguided...or just trying to fool you. Lowering excise taxes will do nothing - nothing - to reduce the size of the illicit cannabis market - the tax does not create illicit product supply. Lowering retail prices on legal cannabis will do little - they have dropped considerably and are competitively priced. Increasing potency might help, a bit, but really, in the case of the dominant segments of legal cannabis, in flower and pre-rolls, the potency is already strong. The way to reduce the size of the illicit cannabis market, is to actually police it and enforce penalties - maybe, even increase the penalties. Illicit cannabis is a business and a business that is worth the risks of being in - increase the risks and you can reduce the incentive to be in the business. The "opinion" is really an attempt to reduce excise taxes by tying it to the illicit market - but it makes no logical sense. https://lnkd.in/g8fB5JR7

🌿 Exciting News for the Cannabis Industry (despite the negative stigma)🌿 🏛️DOJ Recommends Reclassifying Cannabis: The Department of Justice recommended reclassifying cannabis from Schedule 1 to Schedule 3, signaling potential changes in regulations, lending, and growth opportunities for the industry. 🌳Impact on Real Estate: Cannabis businesses face challenges accessing commercial properties due to banking restrictions and zoning disparities, impacting their growth potential and pushing them into less desirable locations with higher rents. 💰Tax Relief and Business Opportunities: Reclassification could provide relief from the heavy tax burden under Section 280E, potentially reducing effective tax rates for legal cannabis businesses from 80% to around 20%, encouraging further industry growth and legitimacy.

"Its obvious limitations aside, the DCC’s dashboards did publicly expose a now irrefutable truth: the (legal) California cannabis market is much smaller and weaker than we thought. Per the DCC, California did just $4.9 billion in legal sales in 2022, and was on pace to do far less in 2023. Often mistakenly described in the media as a “$6 billion cannabis market,” California is in fact less than a $5 billion market today (and shrinking). The state has, by far, the lowest per capita sales of any mature cannabis market. If California’s legal market was simply performing on par with Michigan’s or Montana’s, it would be generating a staggering $13 billion in annual sales. One of the major drivers of California’s struggles is a highly punitive, multi-layered tax system which prices most cannabis consumers out of the legal market. This system regards the legal cannabis industry as a “piggy bank” meant to subsidize specific favored non-profits and interest groups, which in return provide political support for the state’s elected leaders. Unsurprisingly, there is often limited accountability from those leaders in how this cannabis tax revenue is spent. Despite repeated evidence that this tax system is fueling an increasingly violent illicit cannabis market in California that puts the state’s residents at risk, Governor Gavin Newsom (D) and the state legislature have demonstrated an unwillingness to antagonize the interest groups—or as the administration euphemistically terms them, “revenue recipients”—that they regard as crucial allies in their perpetual aspirations for higher office. This helps explain why California’s cannabis excise tax is set to significantly increase, from 15 percent to 19 percent, in 2025. Insanity."

The Justice Department says it is interested in receiving public comments on the “unique economic impacts” of its marijuana rescheduling proposal given that state-level legalization has created a “multibillion dollar industry” that stands to benefit from possible federal tax relief under the reform. DOJ said in its draft notice posted on Thursday that it is “specifically soliciting comments on the economic impact of this proposed rule. DOJ will revise this section at the final rule stage if warranted after consideration of any comments received.” The department also said it’s “concluded that this action may have a significant economic impact on a substantial number of small entities,” in large part because a current ban that prevents state-licensed cannabis businesses from taking federal tax deductions under an Internal Revenue Service (IRS) code known as 280E “would no longer serve as a statutory bar” if marijuana is moved to Schedule III. Read more: https://lnkd.in/gxmKVZFr

🚨 The IRS has reiterated that cannabis businesses cannot take federal tax deductions available to other industries until a federal rule reschedules cannabis. Despite the move to potentially shift cannabis from Schedule I to Schedule III of the Controlled Substances Act (CSA), Section 280E still applies. The IRS stated, "Until a final federal rule is published, cannabis remains a Schedule I controlled substance and is subject to the limitations of the Internal Revenue Code." This advisory highlights the ongoing challenges faced by the cannabis industry regarding federal taxes. Businesses like Trulieve, which applied for a $113 million 280E refund, and others like TerrAscend and Ascend Wellness, expecting refunds, may not see their claims validated under the current law. The IRS is addressing these claims, but the law, as it stands, disallows deductions or credits for businesses involved in what remains federally classified as illegal drug trafficking. This reminder underscores the complex legal landscape for the cannabis industry as it awaits potential rescheduling and the implications for federal taxation. 🌿💼 #CannabisIndustry #IRSRules #TaxDeductions #CannabisReform #280E #TheHigherPath

Where do those cannabis tax dollars go? 🤔 A great read to help gain an insight into what happens after consumers make a cannabis purchase! 🍃 Should every state publish these findings? #cannabis #cannabisnews #cannabisculture https://lnkd.in/eqpy494Q