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News about the legal Washington State industry & public concerns.

Oregon Congress Members Want Tax Code Out of Weed Business

A couple of Oregon lawmakers - both liberal Democrats - want to cut the federal tax burden for a small subset of entrepreneurs - marijuana growers and sellers. Oregon Senator Ron Wyden and Portland Representative Earl Blumenauer have zeroed in on a section of the IRS code.

The code bars anyone selling Schedule 1 drugs from deducting ordinary business expenses such as rent, utilities and payroll - items routinely subtracted from gross revenues by any other business. Marijuana sellers are singled out by the tax code because weed is still treated with severe criminal penalties, right up there with heroin and LSD.

Wyden and Blumenauer think it's time for federal law to catch up with the reality that 23 states have now legalized medicinal marijuana, and a handful - led by Washington and Colorado - have legalized recreational use of it.

But the federal tax code still disallows deduction of any common business expenses, meaning that pot sellers can be hit with tax rates upwards of 90 percent. Most small businesses pay an effective rate of around 20 percent.

The two Oregon lawmakers have introduced bills in both houses of Congress to exempt marijuana businesses from the harsh no-deduction mandate. They tried the same in the last Congress, but got nowhere. How far their new bill will go with both halves of Congress controlled by the GOP remains to be seen.