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The Daily

Ninth Circuit Court of Appeals Rules Marijuana Businesses Cannot Deduct Expenses

Chris Gaetano
Published Date:
Jul 13, 2015
4th-slotThe Ninth Circuit Court of Appeals upheld a previous decisions saying that marijuana dispensaries, even if their activities are approved by the state, cannot deduct any business expenses due to the fact that it's still considered a federal controlled substance, according to Forbes. This means that these businesses must pay tax on 100 percent of their gross income. So far, analysis of the legal marijuana industry shows that most dispensaries spend their first year actually losing money (though they become much more profitable after the second and third years), so being unable to deduct any business expenses can't possibly be good news for people wanting to enter the market. SF Gate, however, notes that the decision also confirmed that these businesses can still deduct non-drug-related expenses, such as food and services.