Making money from legalized pot is becoming harder and harder because, as most people know, marijuana is still illegal under federal law. A tax amendment was passed in 1982 which denied tax credits to anyone trafficking controlled substances. This means that the industry is taking a few wobbly steps in Washington and Colorado and plenty of them are getting hammered by doing so. In fact, some pot outfits are losing as much as 90% of their income to taxes.
The extreme taxation is a deterrent to investors. A lot of businesses end up closing after one or two years.
Though states are going legal about as fast as they can in order to get tax money, some marijuana advocates feel that the 280E tax stipulation is in effect an extension of a federal war on marijuana business.
The IRS, for their part, say they have no control over who or what they tax and marijuana business need to take up their beef with Congress.