[Congressional Record Volume 161, Number 55 (Thursday, April 16, 2015)]
[Extensions of Remarks]
[Page E512]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 SMALL BUSINESS TAX EQUITY ACT OF 2015

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                          HON. EARL BLUMENAUER

                               of oregon

                    in the house of representatives

                        Thursday, April 16, 2015

  Mr. BLUMENAUER. Mr. Speaker, since California first passed a medical 
marijuana initiative in 1996, 23 states, the District of Columbia, and 
Guam have approved medical marijuana programs. An additional 13 states 
have passed laws allowing for the use of low-THC forms of marijuana to 
treat certain medical conditions. In addition, voters in Colorado, 
Washington, Oregon, and Alaska have voted to allow the retail sale and 
adult use of marijuana.
  Any business associated with these expanding industries, however, 
face 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 has long been recognized that marijuana has therapeutic values. 
People use it to deal with chronic and paralyzing pain, the nausea 
associated with chemotherapy, and the symptoms of Multiple Sclerosis. 
More of our veterans now use it to help with PTSD. At least one million 
people now receive legal medical marijuana treatment.
  What remains illegal, however, 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.
  The federal tax code prohibits anyone who sells Schedule I or 
Schedule II substances from deducting their business expenses from 
their taxes. Congress added this prohibition in 1982 after a drug 
dealer claimed his yacht and weapon purchases as legitimate business 
expenses. As marijuana is listed as a Schedule I substance, even 
businesses operating in compliance with state law are not allowed to 
deduct the common expenses of running a small business, like rent, 
utilities and payroll.
  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 important services or to drive them 
underground, which encourages evasion. This bill adapts federal tax law 
to state law and ensures the fair treatment of a legal industry.
  It is time for the federal government to catch up with the states. We 
must level the playing field for small businesses that create jobs and 
boost local economies. The Small Business Tax Equity Act would do just 
that.

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