Full adult use legalization of cannabis could offer one fat cushion to the government’s coffers.
Under full federal legalization, cannabis could potentially create $105.6 billion in federal tax revenue and 1 million new jobs by 2025, according to a report from cannabis industry data and analytics expert New Frontier Data on Tuesday, March 13.
“Under the new business tax rate of 21%, the Trump tax cuts will come as welcome relief to cannabis business owners who already face tax hurdles because of 280E,” New Frontier wrote. Section 280E of the Internal Revenue Service’s code prevents state-legal marijuana companies from deducting what would typically be considered everyday business expenses from their total income. The rule means that cannabis businesses face effective tax rates of as high as 70%.
“Lower tax rates may provide cannabis business owners greater capacity to grow and create more jobs,” New Frontier said.