Colorado has passed another major marijuana milestone, surpassing $1 billion in state revenue since it legalized the drug in 2014.
Up to May of this year, Statista’s Niall McCarthy notes that the state has seen more than $6 billion in total marijuana sales since the industry was given the green light.
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As SafeHaven.com’s Alex Kimani notes, marijuana companies face a pretty hostile tax environment.
First off, they are not allowed any tax deductions or credits for business expenses which can mean effective federal tax rates of as high as 90 percent. Hemp producers are luckier since recent changes to the law now allows them to deduct ordinary business expenses for tax purposes on condition that their products contain no more than 0.3 percent THC.
Second, most banks and financial institutions will not touch them with a 10-foot pole, meaning they have to pay their taxes in cash and not through checks or electronic means.
Yet, they continue to tough it out, making an important mark where they are officially recognized. According to the Tax Policy Center, states with marijuana taxes are obligated to put a portion of their funds toward important social programs ranging from education programs in Colorado and Nevada to administrative costs in California and crime reduction in Alaska.
Luckily, the IRS is trying to get a handle on the situation and hopefully, cannabis companies will soon be able to enjoy the same benefits that other industries take for granted.