Tag Archives: Cannabis

Will New York's New Governor Kathy Hochul Get Legal Cannabis Moving? She Says Yes

New York’s 57th governor, Kathy Hochul — sworn into office this week after embattled Andrew Cuomo resigned — said she is ready to move on the state’s potentially multibillion-dollar legal cannabis program ASAP, reported The New York Post.

The Background: New York’s legal marijuana program came into being on March 31, 2021 after years of wrangling and tense negotiations.

At the time, the Marijuana Regulation and Taxation Act (MRTA) was roundly praised as among the best in the country in terms of the quantity of cannabis one can buy and possess, home grow, delivery, public consumption and social equity that includes automatic expungement and the reinvestment of up to 40% of weed revenue into communities targeted by the drug war as well as disadvantaged farmers and women.

This all sounded breathlessly exciting until everything suddenly stopped. Why?

Many New Yorkers opined that the cannabis program, like so much else in the Empire State, came to a stop or at least a long stall when Cuomo began the downward spiral toward his inglorious resignation after 10 years as governor.

Even before that, Cuomo was in a dispute with the state Senate over several issues and never nominated an executive director for the new Office of Cannabis Management nor appointees to the Cannabis Control Board. The hope was that the New York market would launch as early as spring 2022.

Enter Gov. Kathy Hochul

The former lieutenant governor, though known for being low-key (who wouldn’t be working under Cuomo?) obviously saw the writing on the wall when she tweeted in January 2021 that “It's time to finally legalize recreational marijuana and create an equitable adult-use cannabis program that generates much-needed revenue for New York.”

And now Hochul's chance has come.

Although it’s unclear how quickly Hochul can roll out the state’s program in view of the precious little groundwork done by her predecessor, the governor has expressed her intent to move forward with the cannabis board and other appointments, the Post reported.

The issue will be part of a private meeting to be held next week with Senate Majority Leader Andrea Stewart-Cousins, a staunch supporter of cannabis legalization.

“Nominating and confirming individuals with diverse experiences and subject matter expertise, who are representative of communities from across the state, to the Cannabis Control Board is a priority for Gov. Hochul,” the new governor’s spokesman, Jordan Bennett, told The Post.

“We look forward to working with the legislature to keep this process moving forward,” the Hochul rep said.

Photo courtesy of Tania Fernandez on Unsplash. 

IRS Hosts Marijuana And Cryptocurrency Tax Information Event; Support For Pot Legalization Gets A Me

The Internal Revenue Service (IRS) on Wednesday hosted a forum dedicated to tax policy for marijuana businesses and cryptocurrency…and cannabis legalization was on the menu. How could it not be when there has been growing public support for legalization and the prospects of federal reform?

The tax tête-à-tête, presented by the National Association of Tax Professionals (NATP), looked at issues such as allowable tax deductions and how different states are taxing marijuana — clearly not an easy subject in view of the U.S.'s patchwork of state-by-state cannabis regulations.

Bitcoin At The Nationwide Forum: The IRS Nationwide Tax Forum also covered issues related to paying taxes on earnings in Bitcoin and other forms of digital currency. Again, not a line anyone has seen on their tax forms, at least not yet.

Although one wonders what Detroit Pistons' Cade Cunningham, the first overall pick in the 2021 NBA draft, will do about his taxes next year. Cunningham is being paid 100% of his NBA signing bonus in Bitcoin (CRYPTO: BTC). 

Tax Return For Illegal Activities? Though the meeting was aimed at accountants and tax professionals interested in learning how to “prepare a tax return for illegal activities” and “identify when virtual currency needs to be reported as taxable income,” it provided a high-level overview of some of the financial issues that are unique to the “marijuana industry under the umbrella of federal prohibition,” reported Marijuana Moment.

Cannabis Company's Locked Out Of Tax Benefits: Regardless of the fact that many states now have some form of legalized cannabis, its status under the Controlled Substances Act means marijuana businesses cannot deduct standard business expenses. This provision, known as Section 280E, states that businesses selling cannabis (or any other federally illegal controlled substance) cannot deduct any expenses incurred in the production, distribution and sale of that product.

Section 280E of the IRS tax code essentially keeps cannabis entrepreneurs “locked out of valuable tax credits available to other businesses and should proceed with caution when it comes to business expense deductions,” according to the Hoban Law Group.

Despite this disadvantage, the presenter explained that the legality doesn't matter from the IRS’s perspective — all income from any source is taxable.

Something that may have pleasantly surprised attendees was when the IRS rep said that limited deductions might be available when it comes to reporting the cost of goods for retailers and producers. 

Cannabis companies would be wise to check out the IRS’s new website that was set up last year to tax state-compliant cannabis dispensaries.

Growing Support For Cannabis: One slide shown at the presentation highlighted recent polling indicating that a majority of Americans support ending prohibition. It also provided an overview of the economic potential of the booming marijuana market.

The IRS official who led the panel made reference to legalization efforts underway, especially Senate Majority Leader Chuck Schumer's federal cannabis legalization draft bill that was presented in mid-July. 

“I think this is a very active item—and in doing so, I believe that is becoming more and more mainstream,” said the presenter. “Right now, if we get legislation to regulate—the question is if they’re going to legalize it—then my presentation next year will be very different.”