Feds Slap up to 70% Tax on Legal Marijuana Businesses

A law passed in the ’80s to prevent drug dealers from getting tax breaks is now taking a huge chomp out of legitimate outfits in Colorado and Washington.

Legal marijuana sales in Colorado and Washington have grossed billions, but legal dealers will see little of that thanks to a draconian federal law meant to punish street pushers.

In one of the first years of legal sales, 2015, Colorado moved nearly $1 billion worth of marijuana and is estimated to take in $135 million in taxes on it. Meanwhile, Washington is expected to pull in around $1 billion in revenue from sales taxes between 2015 and 2019. Despite technically being illegal on the federal level, these businesses must file taxes to the Internal Revenue Service—and they may pay as much as 70 percent in taxes to the feds.

That’s thanks to Section 280E of the tax code. Congress passed the measure...

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