Wherever marijuana is legal, it will be taxed. Federal Code section 280E is broad, but it has the salutary effect of denying tax deductions for advertising. (Whatever your view of legalization, public policy ought to discourage advertising for marijuana as it does for lotteries, alcohol, and tobacco.) Colorado income tax law tracks federal law, so Colorado ganjapreneurs can’t deduct advertising expenses on their state returns, either. So far. A bill in the Colorado House would change that. It’s at http://www.leg.state.co.us/clics/clics2013a/csl.nsf/fsbillcont3/D12657F864EC4B2F87257AEE0058844F?Open&file=1042_01.pdf.
Code Section 280E denies deductions for much more than advertising, but that’s a bigger issue.
Update: This provision passed the Colorado Legislature and is now law. C.R.S. 39-22-304 is the provision for corporate taxes; there’s an analog for individual taxpayers, too.
Update: More on 280E and advertising is here.