Legality of pot... (Page 2)

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2014-01-03 2:03 PM
in reply to: Hook'em

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Subject: RE: Legality of pot...

Originally posted by Hook'em

Originally posted by Left Brain

Originally posted by Its Only Money I'm kind of an account, but haven't done any professional tax work in years so don't quote me on this as I am not sure and never prepared returns for revenues made by breaking federal laws. When filing a return and your income is through the sale of something against federal law, I don't think you can claim any legal expenses to reduce that revenue. That means a pot dispensary would pay income taxes on all revenues, not just net income. I think in CA they got around this by being non-profits, but I am not 100% sure. Anyone else know about the income tax side of things here. This is from Wiki so it may or may not be true: Internal Revenue Code section 280E specifically denies a deduction or credit for any expense in a business consisting of trafficking in illegal drugs "prohibited by Federal law or the law of any State in which such trade or business is conducted." Edit to add research and answer to my own question.

I'm guessing there's not alot of poeple claiming income from an illegal enterprise.

But it is legal in Colorado.

OK, gotcha.....how to claim it on federal income tax.  Interesting.

2014-01-03 2:24 PM
in reply to: Left Brain

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Subject: RE: Legality of pot...

And it's a big problem because banks can't lend money nor give credit due to Federal drug/money laundering laws. The big financial institutions won't deal because they are breaking Federal law, even though it is OK in the State. So there are a lot of financial laws on the books to work out, not just the selling of weed.

And the dispensaries can't deposit their drug money in a bank, because it's drug money. They have been trying to come up with creative solutions out in the open on how to get around the laws.

2014-01-03 2:28 PM
in reply to: 0

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Subject: RE: Legality of pot...

Originally posted by powerman

And it's a big problem because banks can't lend money nor give credit due to Federal drug/money laundering laws. The big financial institutions won't deal because they are breaking Federal law, even though it is OK in the State. So there are a lot of financial laws on the books to work out, not just the selling of weed.

And the dispensaries can't deposit their drug money in a bank, because it's drug money. They have been trying to come up with creative solutions out in the open on how to get around the laws.

I don't know, but I wouldn't recommend the center console of your car.



Edited by Left Brain 2014-01-03 2:28 PM
2014-01-03 2:28 PM
in reply to: Left Brain

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Subject: RE: Legality of pot...
Originally posted by Left Brain

Originally posted by Hook'em

Originally posted by Left Brain

Originally posted by Its Only Money I'm kind of an account, but haven't done any professional tax work in years so don't quote me on this as I am not sure and never prepared returns for revenues made by breaking federal laws. When filing a return and your income is through the sale of something against federal law, I don't think you can claim any legal expenses to reduce that revenue. That means a pot dispensary would pay income taxes on all revenues, not just net income. I think in CA they got around this by being non-profits, but I am not 100% sure. Anyone else know about the income tax side of things here. This is from Wiki so it may or may not be true: Internal Revenue Code section 280E specifically denies a deduction or credit for any expense in a business consisting of trafficking in illegal drugs "prohibited by Federal law or the law of any State in which such trade or business is conducted." Edit to add research and answer to my own question.

I'm guessing there's not a lot of people claiming income from an illegal enterprise.

But it is legal in Colorado.

OK, gotcha.....how to claim it on federal income tax.  Interesting.




The IRS is not the DEA, and they will not be in the business of turning over the legal dealers to the DEA, but they are in the business of collecting every dollar they feel they are entitled to. So I think and I am sure this will be challenged, but the current statute prevents any deductions for business expenses related to the trafficking of illegal drugs.

As LB previously pointed out, if there is money to be made by our governments in the drug game, they are going to make it.

I don't know how this has played out in CA and or any other states yet, but I would assume we are going to find out soon.
2014-01-03 2:38 PM
in reply to: Its Only Money

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Subject: RE: Legality of pot...
For full disclosure, I am a non-user and completely for legalization. I just think this part of the issue is interesting. I didn't realize that about the banks.
2014-01-03 2:51 PM
in reply to: Hook'em

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Subject: RE: Legality of pot...
I wonder how many people now will get "randomly" drug tested if you said you were going to visit Colorado for a vacation. Now I can finally feel I can go to Amsterdam on vacation and not have people question why I went. fyi its because that is where my great grandparents are from.


2014-01-06 4:28 PM
in reply to: chirunner134

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Subject: RE: Legality of pot...

I wonder what a Mrs. Fields franchise is going for in Denver right now?

2014-01-06 8:57 PM
in reply to: BrianRunsPhilly

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Subject: RE: Legality of pot...
Originally posted by BrianRunsPhilly

I wonder what a Mrs. Fields franchise is going for in Denver right now?



Don't know about the Mrs Fields...but you can't find a bag of Doritos anywhere!
2014-01-07 8:22 AM
in reply to: rayd

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Subject: RE: Legality of pot...

Originally posted by rayd
Originally posted by BrianRunsPhilly

I wonder what a Mrs. Fields franchise is going for in Denver right now?

Don't know about the Mrs Fields...but you can't find a bag of Doritos anywhere!

You realize now that the government is involved, they are going to have to put warning labels about side effects on each bag of weed.

2014-01-18 8:26 PM
in reply to: powerman

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Subject: RE: Legality of pot...
Originally posted by powerman

And it's a big problem because banks can't lend money nor give credit due to Federal drug/money laundering laws. The big financial institutions won't deal because they are breaking Federal law, even though it is OK in the State. So there are a lot of financial laws on the books to work out, not just the selling of weed.

And the dispensaries can't deposit their drug money in a bank, because it's drug money. They have been trying to come up with creative solutions out in the open on how to get around the laws.




The banks have actually requested formal guidance on the issue from the Office Comptroller of the Currency and have yet to receive any. This alone allows the fed to play a slow hand in choking the marijuana business. Apparently, Visa had a similar prohibition regarding the use of its cards to related to the drug trade, but has lifted or turned a blind eye.
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