Money, Taxes and the reality of the Industry
I have never been an overly political person, I don’t care to go out and yell about my personal opinions in the hopes to have others see it my way. I typically make my decisions based on my personal beliefs and values, then I move on with my life grateful that we live in a nation where we are allowed to have an opinion. The fight for Amendment 3 in Missouri was no different, I quietly made my decision and removed myself from the political speak, allowing others to voice their opinions while remaining objective and outwardly indifferent. I have many friends in this industry, all over the spectrum. One of the reasons I choose to remain out of the controversy is because I truly have love and respect for all of the people who are working to normalize and free this incredible plant.
Sometimes I feel like a fly on the wall, I get to hear a little bit of everything, I am like a vault full of random tidbits of industry information. Its amazing, but it also allows me to make educated decisions and opinions. So something I keep hearing is about the big money in the industry, don’t get me wrong, there are plenty of MSO’s making their way here or who are already here. Its the way the world works, it happens everywhere, we know this. So there is that. Another thing I have heard though is about how much these smaller companies are making at the end of the year, a lot of these conversations are negative and weirdly enough completely misguided. In a quest to learn more about the smaller companies in Missouri I decided to do some research and tell you what I have found.
In order to really get into the nitty gritty of how much Cannabis companies are making at the end of the year, you have to have a thorough knowledge of 280E.
(1)“ No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.
(Added Pub. L. 97–248, title III, § 351(a), Sept. 3, 1982, 96 Stat. 640.) ”
So let's break this down, in 1981 a well known cocaine dealer decided that he was going to write off a bunch of business expenses from his drug enterprise. In response to this, the Reagan Administration created 280E which prohibits anyone from writing off any business expenses regarding schedule 1 drugs.
To bring this back full circle, this means that since cannabis is still a schedule 1 drug, these businesses are not allowed to write off any of their normal expenses, instead they are given an aggressive tax bill at the end of the year that needs to be planned for. If you have ever been involved with the operations of a business or owned a business , you know that it is VITAL to know the in’s and out’s of your books. This has been the downfall of not only many companies in general, but especially many companies in the cannabis industry. If you do a simple search, you will find countless examples of how various higher ups at companies have had to mass lay off people, sell, or even close their doors due to poor financial planning.
Before I continue on, I am not going to say that MSO’s are not as greatly impacted by 280E, but I am going to shift my focus to the small companies in Missouri.
Legalization is at the forefront of many business owners' minds right now, this is it, millions of Missourians will have access to legal cannabis. This is amazing right? Yes and no. Many small businesses have been the victim of the obscure tax codes and now overbearing pressure of 280E looming over their heads as the end of year approaches. Unlike other businesses in virtually any other industry, normal write offs like equipment and day to day expenses fall solely in their hands.
These tax bills hit single license holders some of the hardest. These smaller companies that don’t have the ability to hire the staff they need or buy outright the equipment they need are often out here taking loans against their businesses with the understanding that their margins are thin. This means that they are making far less than people think because they are turning around and paying all their profits to the government thanks to 280E.
So what does this have to do with legalization?
Legalization is going to allow these smaller single licensees to remain open, without a federal change to 280E, these smaller companies will always be the underdog, regardless of who their owners are. Cannabis is not the cash cow that people are making it out to be and to be quite frank, the misinformation is truly harming these smaller companies. One of the things I appreciate about being able to go to the dispensary is the knowledge that what I am getting is tested and safe for consumption. I try to consistently buy from smaller companies in Missouri, not only are they putting out some of the best quality products in the market, but they are also people I know, my friends.
It would be hard to name just one small company that I love here in Missouri, but what I do know is that legalization is going to save these smaller businesses. I know that Missouri is more progressive in their laws than many other states, that being said Amendment 3 was majorly flawed. This must be acknowledged, just like in any other political matter, there was an influx of propaganda and misinformation that skewed people's views of reality.
What we really need is federal legalization. As cannabis becomes more known, less scary, studied and appreciated , we will find that normalization will follow. Let us not get lost in the drama though, let us take a step back and look at the facts.
Cannabis is Medicine
Cannabis is not the Cash Cow that people have made it out to be
Regulations are not a bad thing
280E is a valid law with valid purposes, but its hold over cannabis is outdated and needs to be fixed
There are MANY MANY amazing companies in Missouri
There are MANY MANY amazing cultivators and caregivers in Missouri
Last but most definitely not least, EDUCATION. If you don’t know something, look it up. If you don’t know something ask.
Jk… This is the last:
Millions of Missourians will be able to purchase cannabis legally at dispensaries starting early next year. Millions of people will be able to buy cannabis from caregivers and cultivators for personal use. While not perfect, we have made big changes in so little time, but there is still so much to be done. We need a bigger focus on social equity, we need less focus on who's who, we need more focus on the quality and education behind the product, and we need to work together to progress.
Maybe I am rambling on, but the misinformation gets kind of old after a while. Accusing people of being greedy because they come from money, quite literally has nothing to do with the quality of product they are putting out. These opinions have nothing to do with the actual stories behind the companies and it is so crazy to me that people choose to form their opinions on such little information. Don’t forget to support your favorite local companies at the dispensaries this holiday season. They love us just as much as we love them!
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