[Congressional Record Volume 169, Number 63 (Monday, April 17, 2023)]
[Extensions of Remarks]
[Page E320]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           INTRODUCTION OF THE SMALL BUSINESS TAX EQUITY ACT

                                 ______
                                 

                          HON. EARL BLUMENAUER

                               of oregon

                    in the house of representatives

                         Monday, April 17, 2023

  Mr. BLUMENAUER. Mr. Speaker, today I introduced the Small Business 
Tax Equity Act. This legislation would create an exception to Internal 
Revenue Code Section 280E that allows businesses operating in 
compliance with state laws to take business-related deductions 
associated with the sale of marijuana just like any other legal 
business.
  U.S. cannabis laws are broken and woefully outdated. Section 280E of 
the federal tax code prohibits anyone engaged in the purchase or sale 
of Schedule I or Schedule II substances from deducting their business 
expenses from their taxes. To date, 38 states have legalized medical or 
adult use marijuana in some form. However, marijuana is currently a 
Schedule I substance under federal law and therefore businesses 
operating in compliance with state law are not allowed to deduct the 
ordinary expenses of running a small business, like rent, utilities, 
and payroll. They cannot claim the Work Opportunity Tax Credit if they 
hire a veteran; they cannot depreciate their American-made irrigation 
equipment; and they cannot take any credit or deduction relating to 
construction or operation costs if they want to revitalize a building 
for their operations.
  Prohibiting marijuana businesses from deducting their business 
expenses means that marijuana businesses often pay federal income tax 
rates that are orders of magnitude higher than non-marijuana 
businesses. Disallowing business expense deductions creates a 
disproportionate burden that can put small dispensaries out of business 
and prevents many small businesspeople from entering the industry in 
the first place.
  The Small Business Tax Equity Act will finally allow state regulated 
marijuana businesses to deduct their business expenses on their federal 
taxes, restoring equity with other legal businesses and helping make 
the legal cannabis competitive.
  I look forward to working with the original cosponsors, 
Representatives Joyce, Lee, and Mace and my colleagues in the House and 
Senate to enact this legislation and end the harmful prohibition on tax 
deductions for state-legal cannabis businesses.

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