[jbrot]

The section on marijuana is particularly interesting. You are apparently allowed to deduct ordinary business expenses, even if the business in question is illegal. However, Congress has explicitly disallowed these deductions in the case of illegal drug trafficking. Since marijuana is illegal federally, the courts have ruled that medical and recreational marijuana businesses that are legal under state law may not deduct any of their ordinary business expenses from their federal taxes.

[vmception]

I wonder if that passed the 14th amendment’s equal protection clause. Curious how Congress’ exception is written. Maybe if they tied it to anything on the scheduled substances list then it would pass the 14th amendment.

Edit: > if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law

Ah yes, they wrote it that way. Ok.

[KMag]

It would be interesting to see this challenged for the case where interstate commerce isn't involved. I know the federal government has regularly asserted jurisdiction under the premise that drugs that don't cross state lines still affect interstate prices. I doubt it would be successfully challenged, but it would still be interesting to see it challenged. (I'm not a lawyer. This is not legal advice.)

[peter303]

The legal pot industry will have good profit boost once its economic model is legalized. People in Congress have been trying for over a decade and momentum is building.

[refurb]

I'm not sure. In Canada it's legal and so much money was invested prices plummeted in terms of the cost of marijuana. Maybe not surprising since you can easy grow more than demand.

Once enough producers and retailers go under then you'll probably find some nice equilibrium, but margins will be very small.

[mjthrowaway1]

Yes, it’s brutal. With the Tax Cut and Jobs Act you can incorporate more expenses in to indirect COGS but sales, marketing, opex, admin are non-deductible.

[chiefalchemist]

Slight but important correction. These business are not legal at the state level, their products are decriminalized. Since, as you noted, they are illegal federally, the best states can do is decriminalize. They cannot override the fed status.

[rootusrootus]

Has that actually been decided? The businesses are legal under state law, and if they aren't selling across lines then it's starting to get into gray areas on what enforcement power the feds actually have. Which is probably why they haven't really pushed the issue, because they have reason to believe it wouldn't go their way.

[margalabargala]

Federal drug enforcement has jurisdiction over the states which have passed bills legalizing these products, and it is the stated position of Federal drug enforcement that they will not pursue any enforcement related to these substances in these states.

Thus the products and the businesses are de facto legal, even if they are de jure not.

[gnopgnip]

The omnibus spending bill, at the federal level decriminalizes state legal medical marijuana. All prosecution is prohibited