Income Tax
Is Marijuana taxation a new market for accountants who handle sales taxes?
Marijuana is now legal in several states, and legal for purely recreational purposes in at least three. This will bring new tax revenues into state coffers... But, will the Feds allow it, and does it matter socially?
Nov. 09, 2012
As a member of the Boomer generation, you might think that I am all in favor of those states that recently approved the recreational use of Marijuana – Washington and Colorado. But in fact I have no strong feelings in the issue, except this:
When 18 states have legalized the use of this herb for recreational and medicinal purposes, and when people begin to talk about the impact of it on revenues and business generation, it behooves accounting firms to start to pay attention.
I grew up a Navy brat, and after college volunteered to become a pilot in Air Force during that long ago, far away war. Truth is, using recreational drugs was never a part of our culture, in spite of what you may read in the popular press now. So while I don’t see much sense in continuing to ban the stuff, neither do I use or abuse it. But there is a groundswell under way that will eventually affect practices for local and state governments, medical practices and small businesses.
No, you don’t need to replace your office plants with marijuana plants, though in 14 states you might legally do so. The point is that with 19 states legalizing its use, it will take only another seven before we may be looking at a major shift in drug laws in this country. Not to mention that a lot of businesses will be looking to their advisors for some practical advice for how to handle policies in the workplace and when employees are off duty.
The rules will be shifting, if the recent elections are any indicator, and in chaos there is opportunity. That is, opportunity for accountants to help to sort out the rules and the revenues. And sadly, there is little “official” material to help. The Internet is chock full of nonsense advice like this anti-marijuana public service announcement from the Sixties or the earlier film “Reefer Madness”.
There are a few hints about the use of medical marijuana to help with chronic diseases from Alzheimer’s, Parkinson’s, glaucoma and diabetes to high blood pressure. Chief among these is the fact that the patent for use of cannabinoids and THC (the active ingredients in marijuana), citing a long list of health benefits, is held by…well, the United Stated Government.
Yes, the same government that claims that there are absolutely no medicinal benefits to use of marijuana. Check the patent, issued to the National Institutes of Health of the US Department of Health and Human Services.
Again, no one is suggesting that accountants should be at the vanguard of changing marijuana laws. But the reality is that the culture is changing, and the rising tide of efforts to legalize the growth and use of this herb will mean that companies and individuals will turn to their trusted business advisors for guidance. Accounting firms that fail to plan for this change in social norms will be left trying to catch up.
And woe to the slow.
[The editor would also like to add: “It may be a good time to invest in companies that make munchies.” CPA Practice Advisor takes no position on legalization of marijuana or other referendums. All views above are solely the opinion of the writer.]
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Since founding the U.S. Internet Industry Association in 1994, where he still serves as President, Dave McClure is one of the leading experts, analysts, consultants and lobbyists on IT management issues, as well as cloud-based applications for business.