Pot seller ponders over being legal
But being a tax-compliant and tax-paying business presents challenges for an operation like theirs, which can make getting a license more than worth the hassle. They’re not alone: Our writer Margot Boyer-Dry says that thousands of cannabis entrepreneurs across the state face similar problems.
[They Have Sold Pot for Years. Now They Want to Go Legal. Can They?]
Chris AlexanderCEO of New York Cannabis Regulatory Office, wants businesses like Buddy’s in the newly managed industry. “If you don’t succeed in pulling the legacy market into the legal market, you will limit your tax revenue – and the money you can redirect to affected communities,” he said. Black and Latino New Yorkers are more likely arrested for marijuana offenses than white, non-Hispanic, and the state is spending half of its licenses related to marijuana for people in communities that have been marginally affected by the drug war.
For now, wholesalers like Buddy’s are waiting for instructions on how to apply for a permit.
And there are potential complications. States love to license businesses with a track record, but Buddy’s revenue isn’t on the books, so without official government approval, it can’t really show its earnings. — or spend those earnings on start-up expenses — without the risk of attracting the attention of the Internal Revenue Service. “There is no statute of limitations on taxes,” said Jason Klimek, a tax attorney specializing in cannabis at Barclay Damon.
The cost of a newly licensed business is very high — opening a pharmacy is estimated to cost between $500,000 and $1 million — and it’s hard to raise money to start a business, says Klimek. Bronson and Cantillo don’t have much of a financial cushion, and since marijuana is still illegal at the federal level, most banks won’t lend it to them — or even open one. Bank account.
With the license, they will be responsible for maintaining and filing documents such as financial statements, just like other businesses. They may need to keep a comprehensive record of each tree – where it was grown from seed to sale. “It’s a whole new world of information that you have to navigate,” said Joe Rossi, cannabis practice lead at Park Strategies, a lobbying firm that is working professionally to help Bronson and Cantillo apply. license.