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Taxes, Cannabis and Cryptocurrency
In the US, 33 states currently allow medical use of cannabis, and ten other states have allowed recreational use of cannabis. However, marijuana is prohibited by federal law and is illegal.
Now, here’s what you may want to understand: By the year 2025, US cannabis sales will exceed $25 billion. Due to federal regulations, banks in the US cannot, I repeat cannot open accounts for marijuana retailers. Therefore, cash is used in all cannabis sales and transactions. As a result, marijuana traders are compelled to use cash as a form of payment.
The kicker is, the IRS does not care if your form of income is illegal, you are still required by law to report your income.
The cash transaction mechanism leads to tax evasion. The IRS understands this. They also understand that certain cryptocurrencies yield a safe haven for the cannabis industry. For example: PoshCoin.
Do not be fooled. If the cryptocurrency company does business in America, the IRS can still get your transaction information. Be smart and just put down that you are a farmer when reporting cannabis income.
Sandy Ingram is a retired tax professional still registered with the Department of Treasury. She is also the publisher of the Crypto Regulations Channel. Thje channel discusses US crypto regulations and taxes, mostly how to lower your taxes, legally. You can follow here on Medium and or join the channel for updated information on crypto taxes.
