This article was originally published on the Marijuana Patients Organization site on January 20, 2014.
Tax issues with the IRS are one thing for a marijuana business but you need to exert maximum leverage where the advantage is in your favor. Right here in Michigan, you have that leverage. My name is James Campbell an accountant that specializes in federal tax issues for marijuana businesses and this is a TAX NUGGET.
It’s common for us to expect the 6% sales tax premium on all of our purchases. For the typical shopper the tax is unavoidable because there are few exemptions available on the average consumer purchase. As a rule-of-thumb in Michigan, the end user of tangible personal property is responsible for the sales tax.
The State of Michigan does however offer a number of exemptions from sales tax. For the Michigan marijuana cultivator, your consumer purchases may be exempt from sales tax because you are engaged in agricultural production. This is referred to as an exemption based on use of the item and it’s yours to use if you can comply with two basic steps.
First, you must be engaged in a business enterprise as a Registered Caregiver. According to the Michigan Department of Treasury you can be a sole-proprietor, a limited liability company or a corporation to be considered an enterprise.
Second, you must present Michigan Treasury Form 3372, Michigan Sales and Use Tax Certificate of Exemption to your retail vendor to receive the exemption. The form is very easy to fill out and does not require a Tax ID or Social Security Number to claim the exemption.
Sales tax exemption is a small break but it can add up over the course of a year.
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