[Congressional Record (Bound Edition), Volume 159 (2013), Part 6]
[House]
[Page 7899]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     SMALL BUSINESS TAX EQUITY ACT

  The SPEAKER pro tempore. The Chair recognizes the gentleman from 
Oregon (Mr. Blumenauer) for 5 minutes.
  Mr. BLUMENAUER. Since 1996, when California voters legalized the 
medical use of marijuana, the movement has spread across America. Over 
the last 17 years, 19 States and the District of Columbia have been 
pioneering therapy involving the medical use of marijuana.
  It has long been recognized that marijuana had therapeutic values 
which were utilized with chemotherapy patients to mitigate or to stop 
the constant nausea. People have used it to deal with chronic 
paralyzing pain. There is now a wide range of therapeutic uses, from a 
system of multiple sclerosis to helping some of our veterans with PTSD.

                              {time}  1020

  A million people seek treatment that is perfectly legal under their 
State laws. What is not legal is for these hundreds of legitimate 
businesses providing a product that is important to a million people to 
be able to treat their business expenses like every other business and 
be able to deduct them from their operating income for tax purposes.
  Decades ago, a drug dealer attempted to deduct the cost of his yacht 
and his weapons as a business expense. Congress, understandably, 
responded in 1982 by making expenses associated with dealing in a 
controlled substance ineligible for a deduction. That fixed the drug 
dealer, but it is has now ensnared hundreds of legitimate businesses 
operating under State law, by the way, laws usually approved by a vote 
of the people. As a result, they cannot now deduct entirely legitimate 
business operating expenses; they cannot claim the work opportunity tax 
credit if they hire a veteran; and they cannot depreciate their 
American-made irrigation equipment. The deduction for the construction 
or operating costs of a facility that they may want to revitalize is 
not allowed. As a result, these small businesses end up paying an 
effective tax rate that is double or triple the 15 percent to 30 
percent that would normally be associated with the profits on most 
businesses. Their effective tax rates often are 60 percent to 75 
percent.
  Washington and Colorado are about to begin operation of businesses 
for the recreational adult use of marijuana authorized by their voters 
last fall. The situation is thus to become more complex and a burden 
even greater for more emerging small businesses.
  We don't have to penalize hundreds of legitimate small businesses 
across the country to deal with a drug dealer. I'm introducing 
bipartisan legislation, the Small Business Tax Equity Act of 2013. Any 
business under this act that operates under State law would be able to 
deduct legitimate expenses for their business.
  We shouldn't impose punitive double, triple, or quadruple ordinary 
rates because Congress has not modernized either the Federal drug laws 
or the Tax Code. We should not force them to discontinue a vital 
service for a million Americans or drive it underground or, frankly, 
encourage evasion by punitive taxes that are unjustified or 
unnecessary.
  Let's bring this out of the shadows and encourage these small 
businesses to be treated fairly. It's entirely possible that we will 
end up actually collecting more revenue, fostering more respect for the 
law, and ensuring a vital supply of medical marijuana for more than a 
million people who depend upon it.

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