The U.S. cannabis industry has been in a precarious position for the past few years. Although more than thirty states have legalized cannabis sales in some form, the plant remains illegal at the federal level. So, although businesses can sell cannabis as long as they obtain a state license, federal law considers the business illegal. Despite this, marijuana businesses are required to pay federal tax and because marijuana remains illegal at the federal level, they are denied access to tax benefits.
Early this month, the Internal Revenue Service (“IRS”) released updated guidance on tax policy for the nascent marijuana industry. The agency acknowledges that although operators in the industry still have an obligation to pay taxes, they are denied tax benefits extended to operators in other markets. “A key complaint in promoting the highest degree of voluntary compliance on the part of taxpayers is helping them understand and meet their tax responsibilities while also enforcing the law with integrity…
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