We The People, the White House petition site, had two marijuana petitions up. One petition was to remove marijuana from the Controlled Substance Act and the other petition was to “federally legalize marijuana”. The threshold for a formal response is 25,000 signatures. Both petitions passed with comfortable margins. Since they are substantially the same, they each got the same answer. It went out under the name of Gil Kerlikowske, who is the Director of the Office of National Drug Control Policy. The position is sometimes referred to as “Drug Czar”. So maybe we could think of this as a ukase, but maybe not. Frankly, I find it rather unsatisfying.
Addressing the Legalization of Marijuana
By Gil Kerlikowske
Thank you for participating in We the People and speaking out on the legalization of marijuana. Coming out of the recent election, it is clear that we’re in the midst of a serious national conversation about marijuana.
At President Obama’s request, the Justice Department is reviewing the legalization initiatives passed in Colorado and Washington, given differences between state and federal law. In the meantime, please see a recent interview with Barbara Walters in which President Obama addressed the legalization of marijuana.
Barbara Walters:
Do you think that marijuana should be legalized?
President Obama:
Well, I wouldn’t go that far. But what I think is that, at this point, Washington and Colorado, you’ve seen the voters speak on this issue. And as it is, the federal government has a lot to do when it comes to criminal prosecutions. It does not make sense from a prioritization point of view for us to focus on recreational drug users in a state that has already said that under state law that’s legal.
…this is a tough problem because Congress has not yet changed the law. I head up the executive branch; we’re supposed to be carrying out laws. And so what we’re going to need to have is a conversation about how do you reconcile a federal law that still says marijuana is a federal offense and state laws that say that it’s legal.
When you’re talking about drug kingpins, folks involved with violence, people are who are peddling hard drugs to our kids in our neighborhoods that are devastated, there is no doubt that we need to go after those folks hard… it makes sense for us to look at how we can make sure that our kids are discouraged from using drugs and engaging in substance abuse generally. There is more work we can do on the public health side and the treatment side.
__________
Best case that seems to be a wink and a nod that the feds have better things to do than bust pot shops in Washington and Colorado. It is important to realize federal illegality is going to put a huge crimp in the ability of these businesses to function legally, since it is likely that their operating expenses will not be deductible for federal income tax purposes. You can run a business if some of your expenses are non-deductible, but only if you have very good margins relative to your non-deductible operating expenses. It may be that the best way of organizing will be to operate as partnerships with as few common law employees as possible. If everybody providing capital, property or services gets a distributive share, there will not be any deductions to disallow. It might be awful complicated. Maybe malls will provide free rent to pot shops and charge a premium to the nearby tenants selling munchies. We can count on capitalism to find a way.
I have to say that this response is rather disappointing but I am not giving up on We The People. My own tax simplification “Get The IRS Out Of Defining Family” is performing even more pathetically than I had anticipated but Bob Baty’s petition on clergy housing allowances is picking up steam. I haven’t seen any other tax bloggers answer my challenge to put up petitions, but I keep hoping.
You can follow me on twitter @peterreillycpa.
Originally published on Forbes.com Jan 9th, 2013