In Pictures: High tech for high times. What it takes to run a medical marijuana business

In some ways, getting into the legal marijuana industry is a lot like launching any small business. You need capital. You need grow lights. You need Febreze. And you need technology -- which turns out to be the easy part.

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A creative accountant Here's where the marijuana business turns into Reefer Madness. Thanks to Section 280e of the IRS code, any costs associated with the sale of a Schedule I narcotic cannot be deducted on your federal tax forms, says Betty Aldworth, deputy director of the National Cannabis Industry Association. States usually follow the feds in the expenses they allow. However, dispensaries can deduct the cost of goods sold. In other words, the marijuana itself is tax deductible; the scale you weigh it on inside the store is not. That means dispensaries often end up paying an effective tax rate more than twice that of more mainstream retail operations, says Aldworth.

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In Pictures: High tech for high times. What it takes to run a medical marijuana business

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