Articles Tagged with marijuana business tax planning

The conflict between state and federal law has caused many challenges and legal confusion for Californians ever since medical marijuana was legalized by state law in 1996. Beyond these procedural inconveniences, the legal conflict has sparked broader discussions about the role of marijuana in American society, and California, specifically. These issues came to a head when Californians approved the recreational use of marijuana on November 8, 2016. Now, all adults in California have the right to use marijuana for recreational purposes. The California government has now taken yet another step toward addressing the chasm between state and federal marijuana laws.

The Joint Resolution

Forbes reports that, in September 2017, the California Assembly passed a joint resolution to call upon the federal government to reclassify marijuana. The Resolution specifically requests reclassification for the purpose of legal research and development of cannabis for medical use. Currently, marijuana is classified as a Schedule I drug under federal law. This designation is reserved for drugs with no medical value and a high risk of abuse. For comparison: cocaine and methamphetamine are classified in the less-restrictive Schedule II category.

In addition to research and medical developments, the Assembly also identified concerns with access to financial services for cannabis businesses. The current federal prohibition on marijuana means that most marijuana businesses are prevented from using traditional banks and lending institutions. Many of these businesses simply operate on a cash basis, which makes them vulnerable to theft and violent crime, and also makes it difficult to collect tax revenues on income which is legitimate under state law, but considered illegal drug money under federal law. Continue reading