SOUTHFIELD – Molly MacDonald doesn’t know much about the intricate federal regulations for marijuana. But she appreciates the donation of more than $50,000 from a local cannabis business to her breast-cancer charity.
“We take financial donations from almost everyone,” said MacDonald, CEO of Southfield-based The Pink Fund, which provides financial assistance for patients’ nonmedical bills. Patients often are unable to pay rents or mortgages, utilities or car loans because of lost income while undergoing medical treatments.
Many non-cannabis companies donate to nonprofits and benefit from tax deductions. Josey Scoggin, executive director of the Great Lakes Expungement Network, said the group is largely funded by cannabis industry donations.
“It’s the only industry that’s legally obligated to do good like social equity requirements — that have to submit a plan about what you’re going to do to help a community where you’re licensed,” she said, adding that 88% of her donors don’t ask for a receipt for the money, knowing it’s not deductible.
So how do cannabis companies meet these requirements without running afoul of federal laws, which still regard cannabis sales and use as illegal activities?
Cannabis businesses are barred from deductions beyond the inventory cost of the product itself. IRS rules say any business involved in illegal drug trafficking of Schedule I or Schedule II drugs cannot take any deductions “even if they operate in states that have legalized the sale of marijuana, because trafficking marijuana remains illegal under the federal Controlled Substances Act.”
Michigan voters approved legalized recreational use of cannabis in 2018 and sales began in 2019. Medical use was legalized in 2008.
Since then, Michigan has become the nation’s leader in medical and recreational cannabis sales and the business continues to grow. Sales of recreational and medical products topped $279.6 million in May 2024, nearly 14% higher than May 2023 when sales were more than $245.9 million.
The U.S. Department of Justice is working to reclassify marijuana from a Schedule l drug with heroin and LSD to Schedule III, which includes such drugs as ketamine and anabolic steroids.
The prospect of change offers hope to Michigan’s cannabis entrepreneurs opening access to the normal commercial banking system and standard business-tax deductions.
According to attorney James Allen, the Federal Controlled Substances Act is why it’s “still mostly illegal to provide financial services to the cannabis industry although there is legislation in the works to overturn the decades-old enforcement regime.”
Read more at MSN