Americans for Tax Reform will release a white paper tomorrow advocating a change to the tax code to help marijuana dispensaries in states that have legalized the drug. In the paper, which was released to National Review Online in advance, Grover Norquist’s influential think tank makes the case for conservatives to get behind the reform.
The paper counters opposition from the right by suggesting that advocates of small government should support tax reform for marijuana. “There is a countervailing conservative value of limiting the size and scope of government,” the paper says. “Section 280E raises tens of millions in taxes from a fledgling industry which is immediately being spent in Washington.” The implied question: Which do you hate more, marijuana or big government?
The problem dispensaries face is based on a provision of the tax code intended “to send a message to kingpin drug dealers,” as the paper puts it. The provision, in Section 280E, keeps drug dealers from writing off their business expenses in their taxes. But it puts law-abiding medical marijuana dispensary owners in the same category as Walter White-esque meth dealers. “In essence, they pay a gross receipts tax instead of an income tax,” the paper says. It adds that the opposition to gross receipts taxes is bipartisan, as they place an onerous burden on businesses.
Changing Section 280E is one of national marijuana advocates’ top short-term federal priorities.