IRS rules require that ALL income, including that from illegal activities must be reported on your IRS return. Recall that Al Capone was never convicted for murder, racketeering, prostitution, or any other of the compendium of illegal activities he was charged with, but rather he was tried and convicted for tax evasion!
Mortgage Underwriters’ hands are tied in using income from something the Federal Government considers illegal. Yet new regulations from DC require that lenders verify and borrowers ability to pay before giving them a mortgage.
For example, Washington State had nearly $212 million in marijuana sales in the second quarter of 2016, approaching the $249 million sold in alcoholic spirits. Some argue that someone in the weed business with an 800 FICO is a better credit risk than someone in any occupation with a 580 FICO score for a taxpayer-supported mortgage program like FHA.
Twenty-six states and the District of Columbia currently have laws legalizing marijuana in some form. Three other states will soon join them after recently passing measures permitting use of medical marijuana. Seven states and the District of Columbia have adopted more expansive laws legalizing marijuana for recreational use. Most recently, California, Massachusetts and Nevada all passed measures in November legalizing recreational marijuana. California’s Prop. 64 measure allows adults 21 and older to now possess up to one ounce of marijuana and grow up to six plants in their homes.
I am no fan of recreational drug use. No words need to be wasted over the fact that all narcotics when taken simply for pleasure can be harmful both to an individuals health but also their ability to work and be productive members of society. Yet in spite of my belief, surprising those who know me, I have developed a very Libertarian view on this topic tempered by witnessing the failed three decades old War on Drugs. As a result, I firmly believe it’s time for a national referendum on cannabis. Got a different opinion? I’d love to hear it in the comments below.