Cannabis Companies Are Forced to Pay Taxes in Cash and the IRS Is Getting Annoyed
One of the biggest issues facing cannabis companies revolves around taxes. They can’t make deductions or apply for exemptions that other businesses can, and it’s often hurting their bottom lines. But it turns out the IRS doesn’t really like it either.
Last year the IRS received around $4.7 billion in taxes from cannabis businesses in the United States. And the vast majority of those payments were made with cash, since around 70 percent of U.S. cannabis companies don’t have access to banks which are required to pay either electronically or through check. And apparently, cash payments are a huge pain for the IRS.
In order for a cannabis company to make a cash payment to the IRS, they first have to set up an appointment with their local IRS office. They then go to the office with the cash for the payment, and wait while the IRS counts the whole payment. Two IRS employees must be present in the counting room at all times. It’s just a waste of time and energy.
The IRS previously attempted to punish cannabis companies by charging a 10 percent penalty on marijuana businesses that paid their taxes in cash. But they were sued for doing so, and revised their policy so that any cannabis company that attempted to open an account with a bank and were denied could make cash payments without the penalty.
Now the IRS has handed a $1.7 million contract to a company in Virginia to help streamline cash payments from cannabis companies. It isn’t clear what exactly the contract is for, but the belief is that it’s to create a new system for cash payments that won’t require the appointment and waste of time that they currently enforce.
So it turns out even the government is being inconvenienced by marijuana being illegal.