Feds inflict a taxation Catch-22 on marijuana businesses.

Just as a reminder: national Democrats are committed members of the War on Some Drugs.

Legal marijuana businesses without bank accounts are unfairly assessed a 10 percent penalty on federal employee withholding taxes they are required to pay electronically but are forced to pay in cash, according to a lawsuit challenging the practice.

That’s because the Internal Revenue Service requires all businesses to pay the quarterly tax by bank wire, an impossibility for hundreds of medical and recreational marijuana shops nationwide that are unable to obtain banking services.

And rather than waive the penalty for cash-only businesses paying the tax on time, the IRS advised the companies to avoid the assessment by using techniques that amount to money-laundering, according to a petition filed in U.S. Tax Court.

I don’t smoke the marijuana myself, and if you asked me point-blank whether I think anybody else should I’d say ‘No.’ But this is a pretty obnoxious government scam. The feds have made it insanely difficult for pot-related businesses – which are legal in several states – to get bank accounts; and because of that the IRS then gets to turn around and impose what’s effectively a 10% You Are Unpopular At The God-King’s Court tax on those businesses. You don’t have to be a screaming libertarian to see the problem with that particular blithe worldview; even if you think pot businesses deserve this treatment, eventually the feds will try the same trick on someone that you like. They always do.

Moe Lane

11 thoughts on “Feds inflict a taxation Catch-22 on marijuana businesses.”

  1. The old “I don’t like or do drugs, but they totally should be legal!” routine. *clap*
    But in all honesty, I give up. This country is going to hell anyway. Let’s pour gas on the slow burn and legalize all of them!

    1. I’ve long held the position that the federal government should get out of the business of regulating drugs (except in federal non-state territory) and leave it up to the states. Let the states that want to legalize any and all drugs do so, and the states that don’t want to can keep them illegal. Federalism at work. Let time show which side is the shining example and which side is the horrible warning.

      1. I’d go for that, with one exception — I would empower the Feds to regulate prescription antibiotics as a public health measure, and not out of some misguided attempt to protect the drug user. If antibiotics are overused, then bacteria will inevitably evolve resistance to them … putting the public at risk.

      2. Fifty laws, fifty DEAs, it will be chaos! States will jealously defend their boarders, because one state’s legal drugs might be illegal elsewhere!
        …I can back this plan.

    1. The next obvious target is firearm sellers. They (“the banks”)will put the heat on a wobbly big box store like Walmart and then try to find a gun in this country. Probably take 18 months. See Operation Chokepoint.

  2. Most illegal drugs used to be legal, and society survived the experience just fine.
    The problem is societal breakdown, not illegal drugs. Trying to cure the symptom, rather than the underlying disease, isn’t much help to anybody.
    Especially when the inner cities become war zones, the police become a paramilitary force, and asset forfeiture laws give the government an open-ended writ of attainder (in utter defiance of the Constitution). The cost is much higher than any potential benefit.
    Of course, I also have the objection that your body belongs to you. As long as you’re not actively harming other people, you can do whatever you want to yourself. And the State has no damned business objecting, because they do not, in fact, own you. This is true even if what you’re doing is profoundly stupid. Like doing drugs, getting a tattoo in a language you don’t understand, or poking your face full of holes.
    And don’t give me that crap about addiction being a disease, and addicts being innocents in thrall to the evil drug. While my poison of choice was legal, I took a good long look into that abyss. I chose to step back. Had I chosen to step forward, it would have been a choice, and yes, a moral failing. What’s more, every day that I continued to make that choice and not turn back, would have been a moral failing. I’d have despised myself. For good reason. There’s a reason addicts spiral so quickly.
    Also, let’s not pretend that making drugs illegal will keep someone who want to get high from getting high. Heck, I’ve got quite a few plants with mind-altering properties growing around my house (I highly recommend this, BTW. It does wonders for keeping four-legged pests out of your garden).
    But back to the topic at hand…
    Is anyone actually surprised?

    1. “Most illegal drugs used to be legal, and society survived the experience just fine.”

      I assume you’re NOT referring to the Opium Wars in China, right?

    2. Of course, if your body belongs to you, my company belongs to me, and if I choose not to hire pot smokers who fail a drug test that would be perfectly fine, and if said pot smokers also fail the drug test I would require in order to get welfare benefits I would imagine that would be perfectly fine as well.


  3. “which are legal in several states”

    This is a false statement. Drug dealing is a federal crime. It is not legal in any state. Wishing for unicorns will not make them appear with your morning breakfast.

  4. Funny, for a guy who used to be in a “choom gang,” Obama sure does take a dim view of MJ.
    Almost like he has a religious objection to it, or something.

Comments are closed.