It drives revenue to the state and this is a great thing. A lot of money to the state, Spokane Review estimates $25,000,000 by next July. As I became involved with the industry and found more professionals, I could see some serious problems that are not thought out. Some people have leapt without understanding a How do excise taxes impact the business owner with a sole proprietor or LLC Corporation? Where is it going to be spent?
1. The Excise Tax is part of your gross receipts. It is not written off so you pay more for your insurance policy. I had a client come to me yesterday with a story of another agent telling him to exclude the excise tax from his gross receipt. The simplest way is the amount of money to get product out the door is your gross receipt.
2. The business owner has to list the tax with the IRS as profit. That’s right say hello to higher income taxes to the Feds. The comfort is that when you retire, you will enjoy the higher contribution that you made if Social Security is still around.
3. Say goodbye to reduced Health Insurance Premiums if you are planning on using the Affordable Care Act (Obamacare) on the individual level. The figures are based on your income level so if you have a modest production that you are paying $100,000 in taxes and squeezed out $15,000 in personal income instead of no cost health insurance then you are paying the full amount. Since the Health Insurance is in a transition figuring out premium levels for the next couple of years this could mean thousands if you are an older citizen or have a large family. Your staff can get some great benefits for low cost however whoever is taking the tax burden will be paying higher premiums for their health insurance.
I have known several successful entrepreneurs in the medical marijuana industry stay away from Recreational for some of those three reasons. You can find me at CCSE, Cause M and other organizations for the industry talking about how to improve your Cannabis business. I spend money and time to help hire lobbyist to get the laws written to improve our industry.
If the excise tax stays in place then the Recreational Cannabis Industry will struggle with profits. If it moves to a pass through tax then at least the business owners have some tools for the profitability of their business that other industries have the luxury to use. Get involved with professionals in the Industry. Time is running out and a lot of work has to be done to create functional laws. Help keep the dream alive by owning your business.