The main reason most people don’t grow from seed is simple–phenotypes. Just as your siblings from the same parents can nonetheless be very different from each other, your plants grown from seeds can likewise exhibit different traits. When I grow from seed, I have to identify each one then clone from them before they’re flowered (because cloning flowering plants introduces all kinds of weird hormonal shifts and it’s a huge PITA) then isolate the phenos that are particularly nice. Those get cloned over and over unto many generations, and it’s about 99% certain than any weed you buy is likewise from a cloned female of a preferred phenotype of a given strain.
As for the grey market/black market distinction–grey market is weed grown by medical patients sold within the state to avoid the taxes whereas black market is weed grown by medical growers or those without any license either recreational or medical sold out of state.
Good point about phenotypes, SmartAleq. The seller of the Pineapple Fields I grew last year had identified 4 phenotypes of his strain. All good, but different. One was soo smelly from the very beginning, another plant thought it was a god damn Christmas tree reaching for 8 feet tall, all from the same batch of seeds, presumably from the same plant.
I suppose I am a bit biased toward outdoor growing from seed. I have been an avid vegetable gardener for 35 years or so and I never thought the time would come when I would be able to just sit in the gazebo in the garden and watch my pot grow among the tomatoes and zucchini.
“Pot is like a box of chocolates, you never know what you are going to get.”
Many autoflowering hybrids are ready for harvest in 4-5 months total, seed to harvest. The vegetative growth phase is too short to get significant cuttings for clones. By the time you have a plant you can get a few good cuttings from, its already flowering.
Non-autoflowering (sometimes called “photos” short for photocycled ) can be kept in growth phases intentionally for years without flowering. This allows you to take dozens, even hundreds of cuttings from a known good quality plant.
When I lived in Dallas back in the 90s, somebody showed me a pot plant they had grown from a seed. It was thin, sparse and woody. Only the leaves would indicate that it was a pot plant. After all these years, I have to figure it was Ruderalis plant.
About half the paper is about illegal payments, mainly kickbacks and bribes, but potentially any payment that is illegal by federal or state law, the other half is about drug trafficking.
I’ll break down the important points that are relevant:
Under common law, illegal business expenses were not deductible as they were seen to frustrate public policy. In 1969, there was a Tax reform Act, and in it they decided to codify the common law only for very specific cases, and thus throw away the general common law ruling. These specific cases (mentioned in Section 162) had to do with bribes and kickbacks in general, as well as one thing that gets tested on where I went to school: penalties and fines for violations of the law are also not deductible.
However, drug trafficking was not among the list of disallowed business deductions. That wouldn’t happen until after a 1981 Tax Court case which explicitly ruled that expenses legally incurred in operating an illegal drug trafficking business were deductible. Congress responded by passing a law that was very specific in denying deductions for business expenses incurred in illegally trafficking drugs that are on Schedules I and II. This ended up as Section 280E.
When drawing up the laws for the original set of disallowed deductions in 1969, Regulations were also promulgated that disallowed the addition of any expense disallowed by 162 to be added to the cost of inventory, where it ends up not being “deducted”, but the gain on the inventory’s sale is calculated by taking income less cost, and in this way disallowing any potential assignment of the disallowed deduction as a capital expenditure that might be potentially assigned to inventory.
However, this was absolutely not the case for Section 280E. In section 162, mainly dealing with kickbacks and other illegal payments, you had to make all sorts of legal contortions to try to say that they were part of cost of goods sold, and they quite obviously were not going to be the most significant part of it. The opposite is the case when it comes to selling illegal drugs. Therefore, it was decided that cost of goods sold would be allowed as a deduction (by omitting the Regulation that made the connection to 162) as otherwise there would be a major constitutional issue at hand, since income tax is supposed to be taxing income, not sales. The latter can be added on to the bill of sale and collected from the customer, while the former cannot and so trying to collect this “income tax” from the customer just leads to ever higher sales that are taxed. To avoid turning it into a gross receipts tax which might run afoul of the Constitution, they had to allow cost of goods sold.
But now all you need to do to make sure that your expenses are deductible is to be sure that absolutely all of them can be connected to production of the material that you’re selling. You capitalize absolutely every expense you can, the exact opposite of the normal approach where capitalization means you might not get a current tax deduction, because any expenses that cannot be capitalized as part of inventory aren’t deductible at all!
From here I’ll go further than that paper:
So you need to be sure that any wages that you pay are properly classified as cost of good sold. That means if you employee people, they should be in the active role of provided services that are involved in the production of the crop and its preparation, and not in any administrative or sales role where they do not add value to the product being sold. But you need some administrators and sales people, don’t you? So you have to not pay them anything somehow, and have them only earn money through profit distributions of the business. It means that the owner cannot use any type of legal entity to form the business and have the legal entity pay him wages - he must be a sole proprietor, or at least a single-member LLC electing to be taxed as a disregarded entity. This means that you need every single seller to run their own business separate from that of the growers, so that they can sell the product and deduct the amount they paid for it, and report the profits on their Schedule C (where they don’t get to deduct any of their other costs unfortunately) and thus not ever have any wages paid to a person who isn’t involved in the production of the product that an entity would have to deduct currently instead of capitalizing in cost of goods sold.
Note that this still leaves the potentially quite large cost of shipping the product nondeductible. You would likely, again, want the transporters of the product to be their own independent businesses, such that the payment for their time becomes something that gets reported directly on a tax return and the next person’s cost of goods sold that is deductible. There’s still nothing you can do for this person’s accessory costs though, like fuel.
What about rent for the place where the seller sets up shop? They can get around that slightly by using their own home, so that property taxes and interest are deductible. If they use a commercial building, they should try to get the local zoning commission to rezone that particular building whatever mixed use allows them to legally use it as residential, install a bathroom and a kitchen in it, and claim it as their secondary residence. They don’t even have to live there ever so long as they don’t rent it out - it only has to have the potential to be legally lived in. (That does give up their ability to have another second home on which they’re deducting interest though.) Note that they need to own the building themselves, as rent is not deductible because of the application of the laws we’re trying to get around, but real estate taxes and mortgage interest on first and second residences is.
So that’s how you can get around the current laws the best that you could and still keep doing things nearly entirely legally except for the stupid fact the the feds still technically are making it illegal. I hope that my discourse was enough about how to legally do these things related to a legal state enterprise so as to not run afoul of the rule about discussing illegal activities. At very least, plenty of other people have been discussing the same illegal activities.
There are some grammatical errors in my above post that I didn’t catch until reading through it after it was posted and the edit window had expired. This post is to let you know that yet, I mean “employ” and not “employee” in one particular place, and that I should have tried to maintain uniformity of grammatical person; instead, there’s a sudden shift from “you” to “they” that’s partially explained by moving from the perspective of the big boss man running the growing operation, “you”, to the myriad independent dealers they contract with, “they”, a shift that is not entirely clear and I would make it more clear what the roles of “you” and “they” were.
