If marijuana is rescheduled, as proposed by the Drug Enforcement Administration (DEA), it could lead to the creation of 50,000 new jobs by 2030.
This is according to a report titled The Economic Impact of Cannabis Scheduling Reform on Small and Minority-Owned Businesses, commissioned by the Minority Cannabis Business Association (MCBA) and conducted by Whitney Economics. The report was posted as a public comment to the DEA today, the deadline for doing so.
The MCBA surveyed 206 marijuana licensees across 32 states, uncovering concerning trends within the industry. Only 27 percent of respondents reported profitability, while 41 percent were breaking even, and 36 percent were operating at a loss.
The report states that 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. 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.”
Financial and tax issues were identified as major economic challenges by over 80 percent of the businesses. The MCBA argues that rescheduling marijuana from Schedule I to Schedule III under the Controlled Substances Act (CSA), as proposed by the Justice Department, could alleviate these issues. This change would allow cannabis businesses to take federal tax deductions, which are currently disallowed under IRS code 280E.
Rescheduling “would lead to substantial tax savings and increased profitability for marijuana businesses, including small and minority-owned businesses”.
Without the tax reform that rescheduling would bring, many small and minority-owned marijuana licensees will go out of business, causing major economic losses and unemployment, according to the report.
The report estimates that the marijuana industry has paid approximately $2.2 billion in excess taxes compared to other sectors due to the 280E restriction. Rescheduling to Schedule III would provide significant relief, potentially creating 55,500 jobs by 2030, resulting in up to $2.7 billion in additional wages and $5.6 billion in new economic activity by that time.
