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Medical Marijuana Entrepreneurs Want Small Business Tax Breaks

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Capital City Care, one of D.C.'s first medical marijuana dispensaries, can't take advantage of the usual small business tax breaks.
WAMU/Chris Chester
Capital City Care, one of D.C.'s first medical marijuana dispensaries, can't take advantage of the usual small business tax breaks.

A bipartisan group of lawmakers on Capitol Hill are pushing measures that would bring D.C.'s marijuana dispensaries under the federal tax code.

The U.S. tax code supports small businesses through offering many different deductions. But since federal law prohibits possession and sale of marijuana, when D.C. dispensaries get up and running they won't be able to take advantage of any of those federal deductions.

"We are asking to be taxed. We are one of the only industries in this country coming to D.C. asking, 'Tax us, but tax us fairly,'" said Aaron Smith of the National Cannabis Industry Association, who's in D.C. this week lobbying for changing the tax code.

By fairly Smith means the industry is willing to exchange federal taxes for federal tax deductions. Several members of Congress have introduced legislation that would allow businesses recognized by a state to take advantage of federal deductions. Oregon Democratic Congressman Earl Blumenauer is sponsoring the bill. He says it's wrong to treat people with a locally sanctioned marijuana business as criminals.

"What we're dealing with now is that we have people who are not drug dealers, not involved with anything illegal. They're operating legally under the cover of state law who cannot avail themselves to expensing that irrigation system; that they're going to remodel a facility, it can't be deducted," he says.

The bill is supported by Colorado Democratic Congressman Ed Perlmutter, who plans to introduce legislation soon to open up the banking system to marijuana businesses, so they can get loans and credit cards.

"In just a cash-only system you cannot track for purposes of employment, for taxation and the like, so we need to bring this out of the dark, into the lightness and be able to use our banking systems appropriately," he says.

Supporters in Congress say they re now starting their outreach to Republican leaders, but their bill is likely to prove to be a hard sell to conservatives.

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