If the Drug Enforcement Administration (DEA) ultimately decides not to move forward with marijuana rescheduling, many small and minority-owned cannabis business will have to close shop, “resulting in major economic losses and unemployment,” according to a new industry report. But enacting the reform, in contrast, would grow the sector, adding more than 50,000 jobs by 2030.
The Minority Cannabis Business Association (MCBA) included the data from the report that was conducted by Whitney Economics in a public comment submitted to DEA ahead of Monday’s deadline for stakeholders to weigh in on cannabis rescheduling, offering a detailed economic analysis as the agency had specifically requested in its call for expert input.
The MCBA survey of 206 marijuana licensees across 32 states revealed some troubling trends in the cannabis industry, with just 27 percent of respondents reporting that their operations are profitable, compared to 41 percent that are breaking even and 36 percent that are losing money.
More than 80 percent of the businesses cited finances and tax issues as major economic problems. And MCBA said those issues could be largely resolved in DEA does move marijuana from Schedule I to Schedule III of the Controlled Substances Act (CSA) as the Justice Department has proposed because it would mean that the sector could finally take federal tax deductions they’re currently barred from under an Internal Revenue Service (IRS) code known as 280E.
The “economic data indicates this Proposed Rule would positively impact all 42,125 state-issued marijuana licenses, and in particular small and minority-owned businesses,” it says. “The excess tax payments imposed as a result of IRC § 280E currently prevent marijuana businesses from deducting ordinary business expenses, resulting in higher taxable income and federal tax expense.”
Hellbound and Down 