What Marijuana Business Owners Should Know About Taxes
Dispensaries, processors and growers have budding business opportunities now that medical marijuana is legal in Maryland. People making a profit off of marijuana will need to consider unique taxation issues. Marijuana sales tax laws are complicated because marijuana is still illegal under federal law. However, income from marijuana sale is taxable, whether it is legal or not.
The IRS considers marijuana to be an illegal substance. This means that marijuana businesses are unable to deduct ordinary and necessary business expenses on their federal income taxes because they profit from the distribution and trafficking of federally illegal drugs.
It can be frustrating and potentially risky to navigate complex state and federal tax laws alone. Our experienced tax law attorneys can help you understand the best options for filing your business taxes. We can also help you prevent issues involving sales and use tax.
At Kundra & Associates, we are a premiere Maryland tax law firm, helping businesses avoid controversies. We assist businesses around the world, but our firm is located right here in Maryland. We have a deep understanding of state and federal tax law, and can help you resolve existing issues or solve problems before they can even begin.
Cannabis Businesses Can Apply Certain Deductions
If you are a marijuana business owner in Maryland, then you may be able to deduct the costs of goods sold. Goods sold can include the cost of marijuana itself, the cost of labor and necessary supplies. Fortunately for marijuana businesses, these costs often makeup a majority of businesses expenses. In the case of growers and processors, these expenses makeup an even larger cost of expenses.
Additionally, marijuana businesses may be able to deduct business expenses by separating the portion of the business that is unrelated to distribution and trafficking of the drug. Our attorneys can help you determine if you can genuinely separate an aspect of your business from marijuana distribution and sale.
With the state limiting the number of dispensary licenses, new business growth is somewhat limited at this point. However, many people in the marijuana industry see progress on the horizon. Legalized marijuana in Maryland is a plausibility in the future, indicating even larger potential for growth.
Get In Front Of Marijuana Tax Issues
Due to fast-pace changes in the industry, it can be difficult to stay on top of marijuana tax matters. It is important for business owners to discuss tax issues with a tax law attorney. Our knowledgeable lawyers can help you stay in compliance, while mitigating the impact on your bottom line. Call 301-637-8130, or email us today, to arrange an appointment.