Bennet Cosponsors Bill to Reform Tax Laws for Legal Marijuana Businesses

Washington, DC - Colorado U.S. Senator Michael Bennet has cosponsored a bill that would reconcile state marijuana laws and federal tax law. The Small Business Tax Equity Act, introduced by Senator Ron Wyden (D-OR), would allow marijuana businesses operating in compliance with state law to take ordinary business tax deductions.

"With more states joining Colorado to legalize medical and recreational marijuana, we need a tax code that doesn't unfairly penalize these small businesses that are trying to operate within the law," Bennet said. "This bill would make important updates to our tax code to allow legal marijuana businesses to take the same tax deductions as other small businesses."

Twenty-three states, the District of Columbia, and Guam have passed laws allowing for the legal use of medical marijuana. An additional 12 states have passed laws allowing the use of low-THC forms of marijuana to treat certain medical conditions. In many of these jurisdictions, patients can access medicine safely through state-regulated dispensaries.

The federal tax code, however, prohibits anyone selling Schedule I or Schedule II substances from deducting business expenses associated with the sale of marijuana from their taxes. Marijuana is a Schedule I substance. Therefore, even businesses operating in compliance with state law are not allowed to deduct the common expenses of running a small business, such as rent, most utilities, and payroll.

# # #