Blog

From Michael Roberts at the Westword:

Marijuana, even of the medical variety, remains illegal at the federal level — meaning that dispensary owners can’t take business deductions on tax returns they submit to the feds. But since MMJ is legal in Colorado, shouldn’t they be able to deduct legitimate business expenses on state forms? Mitch Woolhiser, co-owner of Northern Lights Natural Rx, thought so. But he was wrong.

Why are such deductions disallowed? It’s complicated….

When Woolhiser and his wife filled out their state returns in 2010, they took business deductions for Northern Lights, and their submission sailed through without an apparent problem. So they did likewise for 2011, only to receive an unfriendly letter from the Colorado Department of Revenue — a missive officially known as a notice of deficiency or rejection of refund.

“It’s basically a statement regarding my individual tax return,” Woolhiser says. “Because we’re an LLC, it’s on our individual taxes. They adjusted my return to reflect the actual gross adjusted income from my 1040 rather than what my accountant entered.” As a result, his modest, $877 refund was transformed into a bill to the State of Colorado for well over $3,000.

To add insult to injury, the state reexamined his 2010 return and kicked back that form as well. Because Northern Lights was just getting started back then and wasn’t making much if any profit, the amount he now owes for that year is much smaller: under $200. But combined with the 2011 amount and the $17,000 he had to pay to the federal government, the sum came to around $20,000 — which just happened to be almost exactly the amount of net profit the MMC generated as measured by standard accounting practices.

“They took all the money we made,” Woolhiser says. “It was a 100 percent tax rate.”

This turn of events wasn’t totally unexpected. “My accountant is an expert, and she warned me this might happen — but I didn’t believe it,” Woolhiser concedes.

He sees this policy as patently unjust. “We have to pay for a state-issued license from the MMED (Medical Marijuana Enforcement Division),” he points out, “and now they’re demanding that we pay them the fee right away, because they’re broke. But at the same time, they’re not allowing me to take standard legal deductions from a state legal business?”

Nope — and that’s been the case since the beginning of the MMJ industry in Colorado, according to Colorado Department of Revenue spokesman Mark Couch. “The basis for Colorado taxes is the federal taxable income plus or minus certain items specifically identified by Colorado law,” he writes via e-mail. “Standard business deductions for medical marijuana dispensaries are not specifically allowed under Colorado law, so we do not allow the deduction beyond what is allowed at the federal level.”

If that’s the case, why wasn’t Woolhiser’s 2010 Colorado tax return flagged? “We have reviewed additional deductions this year, which is why we may have reviewed this particular taxpayer this year where we did not review the deduction last year,” he allows, adding, “Plans are to expand this particular review more next year, not only for ‘standard business deductions’ but other improper deductions we have been seeing and disallowing.”

Couch concedes that Woolhiser is not the only dispensary owner unhappy that such deductions aren’t allowed at the state level. He describes the number of gripes on the subject as “not a huge number, but some. We get complaints about a lot of adjustments we make. Just part of the job.”

Woolhiser’s equally unhappy with various medical marijuana industry groups, who he faults for not addressing the situation. But Shawn Coleman, executive director of the Cannabis Business Alliance, stresses that the issue is indeed on the CBA’s radar. “We’ve known about this for a while, and we’ve been working on it for a while,” Coleman says. “I think the reason it hasn’t been a big story yet is because most of the businesses aren’t profitable yet. This tax issue only becomes an issue once they’re profitable. And since we’re starting to see people getting profitable, the problem is going to get worse instead of better.”

In Coleman’s view, “the problem is the federal tax code, which says if you are engaged in a business that’s against federal law, you can’t claim business expenses. It’s a law designed for interrupting international drug cartels, the crack house on the corner and things like that, which don’t apply to this industry. So in a lot of people’s opinions, this is a misapplication of the tax code.”

Nonetheless, the Colorado Department of Revenue “follows federal tax law,” Coleman goes on. “The idea is that you probably told the feds the truth, so we’re going to charge you taxes based on what you told the feds. So people who say, ‘We can’t make these deductions on the federal level, but we can do it in Colorado, because it’s legal here’ are getting the rejection letter. And the Department of Revenue says that’s because they haven’t been specifically told in legislation to allow the deductions.”

Does that mean a bill could be passed in Colorado instructing the Department of Revenue to allow business deductions for medical marijuana businesses? When asked, DOR’s Couch refers the question to the state’s Office of Legislative Legal Services. There, a source tells us the office hasn’t studied the matter in detail yet, because no legislation has been submitted about it. However, he believes a state fix would be possible, albeit with potential federal repercussions.

One way around this dilemma would be for the U.S. Congress to pass a law to allow states more leeway when it comes to medical marijuana, and Coleman says there is already legislation on the subject: the Small Business Tax Equity Act, sponsored by Representative Pete Stark, a California Democrat. In Coleman’s words, “It would clarify the federal tax code so that the language would not apply to state-legal businesses.”

Trouble is, the Small Business Tax Equity Act has been languishing since being introduced in May 2011, and the likelihood that it will suddenly start rocketing through the process is slight, especially during an election year. And while pushing such a measure in Colorado might be simpler, no legislator has stepped forward to sponsor such a bill — and even if someone does, the next legislative session doesn’t start until January 2013. With that in mind, the CBA’s Coleman wants to wait to start talking to legislators about taking up this cause until after the November elections.

In the meantime, Woolhiser is frustrated. He calls the stereotype of medical marijuana making entrepreneurs rich a “huge misnomer” and concedes that if he’d known all of the hoops through which he’d be made to jump simply to break even, he might never have gotten into the industry in the first place.

Regarding the current Colorado tax laws about medical marijuana, he believes “something’s got to be done. It’s just basic fairness: You shouldn’t be penalized for following state law. I understand it on the federal level. But this is ludicrous.”

More from our Marijuana archive: “Medical Marijuana Enforcement Division staff cuts big but likely temporary.”

Post comment

You must be logged in to post a comment.

The Latest Biz

Member Login



Follow Us


  • very small tits videos
  • wrong xxx sex tube videos
  • Xxx sex extrem
  • amateur video first girlfriend
  • teen webcam flashing
  • sex round ass
  • emo girls naked on webcams
  • Sex with
  • hawaiian interracial sex
  • boy girl young models
  • free old pussy photos
  • asian dvd rental by mail
  • Huge big pussy
  • mature sweet pussy
  • free sex with machines movies
  • free interracial amateur mature sex movies
  • girl stripteasing till she is naked
  • Hot lesbians making out in bed
  • petite japanes cunt
  • blonde young pussy
  • raunchy sex with mature women
  • mature lesbian gets fucked by
  • cum swallowing wife blowjob shaggit camelstyle
  • young tight pussy photos
  • swinger wife fucking black amateur
  • free nude amanda peet pussy pics
  • Asian adult sex movies
  • dicks fucking tits
  • british girls and glamour
  • topless bikini pictures
  • Young thai girls nude
  • jeep girls video
  • girl sucks on nipples pictures
  • wife and lesbian mom
  • girls showing breasts at public places
  • Veronika zemanova sex video
  • Nude girls vidio
  • amateur twink boy videos
  • beauty queen embarrasses by web pics
  • girl ass fingering guy
  • babysitters hardcore sex pictures
  • free sex pics mature for
  • World largest natural boobs
  • asian girl bss
  • Melissa puente nude video
  • german teen virgins pics
  • free ass insertion movies
  • sexy ebony teen pics
  • girl riding guy video sex
  • Sexy latin girl dancing
  • Yong sex video
  • sex usa asian one night
  • ass exam videos
  • scarlett johanson naked video
  • hollywood scene in movies
  • sweet european pussy
  • erotic womens
  • czech glamour girl petra daisy
  • gagging mature handjob cum vids
  • free creamy facials pics
  • sexy handjob girls
  • black shemale archives
  • chicks with dicks masturbating
  • japanese sex bbs
  • Big fake breasts
  • mature sexy women free pictures
  • Naked teacher video
  • Xxx sex in india
  • Extreme holly fucks girls
  • free passionate svideo
  • stephen malkmus pictures wife
  • peeing asian girl galleries
  • sex in japaness
  • pussy orgasm cum
  • hairy hung black shemale
  • Girl moaning during sex
  • naked skinny teenager girls
  • chinese japanese facial
  • lesbian group sex pictures
  • vannessa naked pictures
  • streaming girl gives guy anal
  • mature tabboo sex
  • hamster horny mature women videos
  • alycia lane espn bikini pictures
  • free midget sex video
  • camel sex free movies
  • cartoon devil girl
  • free view movies sex
  • streching your pussy
  • Tanushree dutta big boobs
  • oldf fat hairy granny pussy cumming
  • monster dildo orgasm video
  • Lesbian pussy spanking
  • Chun li nude video
  • What does a girls vagina taste like
  • teen small fuck
  • little girls flashing titties
  • Sexy girl booty dancing
  • mmf wife swx stories
  • girls gone wild free demo videos
  • French lesbian girls
  • asian sex mpegs
  • older momen fuck pics
  • scarlette johannsen topless pics
  • xl black babes
  • youngest asian teen
  • homemade group sex photos free
  • asian gagging on black xxx
  • nda movies girls
  • free russian hardcore movies
  • tight pussy teens
  • asian vampire drama movie
  • die young lyrics black sabbath
  • videos blones
  • Blonde french teen gangbang
  • body boarding sex video
  • Indian ass video
  • videos of hardcore
  • lesbian blonde babes
  • petite wife husband watch
  • abrianna naked pussy tube
  • shemale charms galleries
  • amature wife at glory hole video
  • Bianca beauchamp nude photos
  • free mother fuck sex movies
  • free asian teen
  • drug for anal sex
  • junior pussy nudie pics
  • small tits erotica vids
  • Feet teens links
  • free adult mature sex videos
  • online black girls
  • girlfriend trys black
  • black s party
  • Pinay teens sex scandal
  • movie breed anal
  • mature latina milf videos
  • sexy nude arabian girl
  • interracial cartoon movies
  • Hot girls bend over
  • skinny black teen fucking
  • analsex teen asia video
  • old boobs free pics
  • free high quality sex picture
  • hard black titty fuck video
  • jamie gunn naked video
  • xxx viteos
  • homaid home sex videos
  • exploited black teens membership
  • tube video asia bdsm
  • free turkish sex pics
  • amateur sleeping sex videos
  • asian nude anal
  • free machine orgasm
  • Hot kisses and sex
  • view fred durst sex video
  • download free aunty sex vids
  • farmer takes a wife reality
  • young greek girls
  • bradly cooper sex movie
  • the movie young victoria
  • free family threesome sex movies
  • real homemade amateur gang bang
  • teen blowjob and threesomes
  • latest star pic gallery
  • movies of girls getting pussy spanked
  • oral sex video preview india
  • free asian cumshot videos
  • bizzar sex pics
  • create your own naked girl
  • black young sex
  • glamour nylon girls
  • naughty wife picture post
  • mature in heat pics and videos
  • katherine heigl sex vids
  • old with young free movies
  • free ugly black
  • drunk wife does strip at party
  • Sexy big titted teen
  • tits ass b movies
  • free pictures of barely legal pussy
  • Pretty teen tits
  • Sex of hot lesbian
  • grope asian girl
  • young asian nude models
  • sexy beach college girls
  • free video grandpa gets blowjob
  • ebony girls caught masturbating
  • watchmen sex scene i video
  • black ghetto mature pics
  • Teen lesbo dildo sex
  • old saggy pussy
  • black phat ass
  • free boy fuck videos
  • homemade blonde sex videos
  • lesbian web sites
  • jasmine st claire free sex videos
  • very young first time sex stories
  • naked lesbian girls having wild sex
  • facial cumshot movies wmv
  • free man woman having sex videos
  • sex blond huge tits
  • mature senior erotic pic gallery
  • sex videos erotica
  • brandi belle pool fuck video
  • very young girl blowjobs
  • girl bending over with saggy tits
  • teen naked videls