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Up in smoke: WA pot firms say their profits are getting burned down by tax bills

Up in smoke: WA pot firms say their profits are getting burned down by tax bills

A provision in the U.S. tax code that enables the IRS to tax marijuana-related businesses on excise taxes paid to the state is a chief concern.

By Bill Lucia

Cannabis City was the first recreational marijuana retailer to open in Seattle. The shop recorded just over $2.5 million in total sales between early July and the beginning of December, according to Washington State Liquor Control Board records.

While that might sound like a healthy amount of revenue for a new retail business with a single storefront location, the company’s owner says that a potent mix of state and federal tax obligations is straining the shop’s finances.

“We’re just struggling to stay alive,” says James Lathrop, the owner.

In order to cover all of his taxes, and other expenses, Lathrop said that he would need to more than triple the wholesale price of the marijuana he sells. “To actually make it work you have to put it on the shelf at $36 per gram,” he said during a recent interview. Currently, most per gram prices at the shop are hovering between $20 and $23, according to an online menu.

For Lathrop and other players in Washington’s budding recreational pot trade, this year is simply about hanging on and hoping to turn a profit in the future. “We’re just taking a hit to pay those taxes and keeping the doors open,” he said.

http://crosscut.com/2014/12/08/politics-government/123042/pot-marijuana-excise-taxes-washington-state-280e/






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