Nobody enjoys tax season; but likely few people dread the weeks preceding April 15 more than pot shop owners.
Ever since Colorado voters kicked off the grand experiment of legalizing recreational marijuana statewide, local cannabis company owners have routinely had to navigate the challenges of operating a business that deals with a product considered lawful locally but illegal by the federal government. The most financially painful of those conflicts remains a discrepancy in the federal tax code that prohibits marijuana companies from taking the standard deductions available to most businesses — and a July 3 ruling by the 10th Circuit Court of Appeals continued to suggest there is no judicial remedy for the problem.
“This has been one of those legal issues that has really plagued the industry for a number of reasons,” said Zane Gilmer, partner at Stinson Leonard Street. “Primarily, it’s a problem for the industry because it really results in effectively a higher tax on the cannabis industry than a non-cannabis business operating next door.”