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  1. #1

    Default Marijuana Related Business

    My question involves business law in the state of: michigan

    Hello, I would like to start a marijuana trimming business. It is now legal in my state to grow up to 12 plants. A LOT of people are growing and I know quite a few growers who know quite a few growers and so on.

    As this will be a mostly cash and word of mouth business what are the tax implications? I would hopefully be depositing 1k a week cash in my business bank account. I will have no employees and the equipment is minimal, I would be purchasing a $6000 trimming machine and a few other items, my total startup cost will be less than 10k. I will be going to people's houses grow sites and trimming their finished product.

    What kind of receipts would I need If the IRS started asking questions? A lot of growers wouldnt want their name being put on receipts and would only pay with cash. Despite the legality most growers are still pretty leary of having names named.
    I know that a lot of people dont like trimming their product because it is a very tedious process, they have to hand trim for hours and days unless they invest in the trimming machine.

  2. #2
    Join Date
    Oct 2006
    Posts
    15,744

    Default Re: Marijuana Related Business

    Quote Quoting Chickenman0710
    View Post
    My question involves business law in the state of: michigan

    Hello, I would like to start a marijuana trimming business. It is now legal in my state to grow up to 12 plants. A LOT of people are growing and I know quite a few growers who know quite a few growers and so on.

    As this will be a mostly cash and word of mouth business what are the tax implications? I would hopefully be depositing 1k a week cash in my business bank account. I will have no employees and the equipment is minimal, I would be purchasing a $6000 trimming machine and a few other items, my total startup cost will be less than 10k. I will be going to people's houses grow sites and trimming their finished product.

    What kind of receipts would I need If the IRS started asking questions? A lot of growers wouldnt want their name being put on receipts and would only pay with cash. Despite the legality most growers are still pretty leary of having names named.
    I know that a lot of people dont like trimming their product because it is a very tedious process, they have to hand trim for hours and days unless they invest in the trimming machine.
    If people only have 12 plants, what motivation would they have to pay someone else to trim them?

  3. #3
    Join Date
    Oct 2014
    Posts
    7,462

    Default Re: Marijuana Related Business

    Quote Quoting Chickenman0710
    View Post
    My question involves business law in the state of: michigan
    As this will be a mostly cash and word of mouth business what are the tax implications?
    The federal income tax implications are the same as for any other business. You need to report all the gross income you have from the business. You are allowed to deduct from that income your non capital business expenses and for capital expenses (equipment purchases and other things that will last for more than a year) you generally depreciate those over the useful life of the item purchased or you may elect to deduct the cost in full in the year purchased under section 179 if you meed the requirements. You need to keep adequate records of the income and expenses. Not getting something with the name of your customer on it for the income is not a big deal as long you have good records showing each payment and who you got it from. Your customers, however, should be providing you with a Form 1099-MISC for what they pay you if it is at least $600 in total for the year. For your expenses, though, you do need good receipts or other documentation for that. See IRS Publication 334 and Publiction 583 for more information. They should answer most of your questions.

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