Marijuana is legal to buy in several states, but no law says that selling it will be free from cumbersome expense and paperwork, especially when it comes to taxation.

Sales of the drug are permitted for recreational use in just four states — Colorado, Oregon, Washington and Alaska — and the District of Columbia; 18 other states allow sales for medicinal use. But marijuana is still illegal under federal law, and that helps explain why production and sale are tightly controlled.

A record of each plant must be maintained, beginning before the seed even sprouts, and it must be updated with every significant movement or activity involving the plant, business owners and their advocates within the industry say. Once a plant is processed for consumption and reaches a store, the authorities want to get their cut.

City, county and state governments tax marijuana sales, often at rates that differ from place to place and are higher than for other products. To complicate matters further, customers typically must pay different tax rates on the substance itself, depending on whether it is intended for medical or recreational use, and yet another rate on related items, say, vintage Mr. Natural T-shirts.

Full Article: http://www.nytimes.com/2016/02/21/business/yourtaxes/marijuana-may-be-legal-but-good-luck-filing-the-paperwork.html?_r=0