[Congressional Record Volume 159, Number 77 (Tuesday, June 4, 2013)]
[Extensions of Remarks]
[Page E794]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 SMALL BUSINESS TAX EQUITY ACT OF 2013

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                          HON. EARL BLUMENAUER

                               of oregon

                    in the house of representatives

                         Tuesday, June 4, 2013

  Mr. BLUMENAUER. Mr. Speaker, since California first passed a medical 
marijuana initiative in 1996, 19 states and the District of Columbia 
have approved medical marijuana programs. In addition, voters in 
Washington and Colorado recently voted to allow the sale and use of 
recreational marijuana. Yet any business associated with these 
expanding industries faces a legal gray area between federal and state 
law. While states have expanded legal economic opportunities, federal 
drug, tax, and banking laws continue to limit these emerging small 
businesses.
  It's long been recognized that marijuana has therapeutic values. 
People use it to deal with chronic paralyzing pain, the nausea 
associated with chemotherapy, the symptoms of Multiple Sclerosis and 
more and more of our veterans now use it to help with PTSD. At least 
one million people now receive legal medical marijuana treatment.
  What, however, remains illegal is for the thousands of legitimate 
businesses providing a legal product to treat their business expenses 
like every other business and deduct them from their operating income.
  Decades ago, a drug dealer claimed the cost of his yacht and weapons 
as legitimate business expenses. Congress responded by making expenses 
associated with a Schedule I or Schedule II controlled substance 
ineligible for deduction. This change has since ensnared the thousands 
of legitimate marijuana businesses operating in compliance with state 
law, who are now paying a federal income tax double or triple the 
effective tax rate of most businesses. These businesses cannot claim 
the work opportunity tax credit if they hire a veteran. They cannot 
depreciate their American-made irrigation equipment. The deductions 
that any other business could take for the construction or operating 
costs of their facilities are unavailable to them.
  This is why I am introducing the Small Business Tax Equity Act, 
bipartisan legislation to allow marijuana businesses operating in 
compliance with state law to deduct their legitimate expenses. It will 
only have effect in states which have legalized aspects of marijuana 
use.
  Legal businesses in America are taxed on their income, not on their 
gross revenues, except for the otherwise legal operation of marijuana 
businesses. Our failure to update federal tax law forces these 
businesses to discontinue an important service, or to drive it 
underground, which encourages evasion. This bill conforms federal tax 
law to state law and ensures the fair treatment of a legal industry.

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