Dispatch #3: Billion-dollar biz marches on in Colorado – Berkshire Eagle (subscription)

By Larry Parnass [email protected]

It’s Sunday, a new week here in Colorado, as I continue to gather intel on how legal sales of recreational marijuana are changing this place, a year before they are expected to start in Massachusetts.

I’ll be heading south today to interview people in Colorado Springs, which said no to recreational weed sales. Are people still happy with that decision? Do they regret losing the economic boost this industry is providing?

After that I’ll continue south to Pueblo, which went the other way and embraced cannabis cultivation and sales. But even there, some have questioned the wisdom of recreational weed. A vote failed last November to repeal sales. 

Those decisions in Colorado Springs and Pueblo figure in, at least marginally, to newly released figures on cannabis sales statewide in May.

That month, $127.7 million worth of cannabis was sold. As the Denver Post reported Friday, the May figures, though less than the $131.7 million of marijuana, concentrates and edibles sold in March, set a milestone of a sort.

For 12 months in a row, sales topped the $100 million mark. 

While a lot of money is changing hands, it isn’t easy to prosper in this young industry.  For one, retail shops face rules that result in effective tax rates of 70 percent. That’s because of Section 280E of the IRS code, which bars businesses that sell cannabis from deducting expenses. The rule is designed to punish “traffickers” of Schedule I and II drugs. Marijuana is a Schedule I substance.

By comparison, non-cannabis businesses face a tax bite in the 30-percent range, according to an analysis by the National Cannabis Industry Association. The rule dates back to the Reagan administration and applies even in states where cannabis sales are legal. 

“It should get better over time,”

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