Is Tax Relief for Marijuana Businesses Coming?: Kiplinger Tax Letter – Medical Marijuana Program Connection

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Businesses that sell marijuana have a heavy federal income tax burden. They are taxed on their income but can’t write off most of their business expenses. Section 280E of the federal tax code bars marijuana firms from claiming business expenses on their federal tax return other than for their cost of goods sold. It doesn’t matter that the use and sale of marijuana are legal under the laws of the state where the business is located. Twenty-three states and the District of Columbia, have legalized marijuana for recreational use, and about forty states permit the drug for medical use.