Legal marijuana businesses face tremendous tax bills because they cannot take deductions on rent, employee salaries or utility bills, The New York Times reports. The ban on marijuana deductions comes from a federal law aimed at drug dealers.
The law, passed in 1982, was designed to prevent drug dealers from claiming their smuggling costs and couriers as business expenses, the article notes. Congress passed the law after a drug dealer who had been jailed on drug charges went to tax court to argue the money he spent on his business should be considered tax write-offs.
The provision bans all tax credits and deductions from “the illegal trafficking in drugs.” Marijuana business owners argue the provision is preventing them from hiring more workers, and in some cases may even force them to shut down.