Lawmakers to Introduce 280E Reform
On April 9, 2015, Rep. Earl Blumenauer and Sen. Ron Wyden announced that they will introduce the Small Business Tax Equity Act of 2015 in Congress next week. The purpose of the bill is to amend Section 280E of the Internal Revenue Code to allow a business operating in compliance with state law to take deductions associated with the sale of marijuana as any other legal business does. Similar measures were introduced in 2011 and 2013, but died in committee.
Specifically, Section 280E provides that:
“No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.”
Enacted in 1982, at the height of the War on Drugs, the Code section was designed to prevent illegal drug dealers from claiming the cost of items such as guns or boats as deductible business expenses. Today, however, the law prevents legal marijuana businesses from deducting the common expenses of running a business, such as rent, utilities and payroll. They cannot claim the Work Opportunity Tax Credit if they hire veterans, and they are limited in lawful deductions relating to construction or operation costs if they want to remodel a building for their retail operations.
As a consequence, dispensaries and growers may find themselves paying federal income tax at a rate as high as 90 percent, compared to an effective rate of around 20 percentpaid by other small businesses, according to the Small Business Administration. The tax rate can be the difference between survival and failure for a fledgling business.
The 2013 proposal, on which the new bill is likely to be modeled, simply adds the following 15 words at the end of 280E as it currently exists: “unless such trade or business consists of marijuana sales conducted in compliance with State law.”
The amendment would clearly apply only to those businesses acting within the law in the 35 states that have legalized cannabis sales in some form. The law will likely provide only prospective relief. It does, however, rationalize a conflict between state and federal law that advances none of the eight enforcement priorities outlined in Department of Justice’s Cole memorandum.
The anticipated 2015 bill has already gathered support from Americans for Tax Reform, Drug Policy Alliance, Marijuana Policy Project, Americans for Safe Access, NORML, the National Cannabis Industry Association and Grover Norquist, head of Americans for Tax Reform.
On Tuesday, April 21, the Marijuana Investor Summit in Denver will feature a break-out session on Section 280E compliance co-hosted by Adam Fayne of Arnstein & Lehr LLP and Jim Marty of Bridge West LLC. The session is designed to assist investors and cannabis entrepreneurs unravel the complexities of Section 280E and other financial issues faced by the legal marijuana industry today.
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
About MJINews
MJINews.com is owned by Panther Media, which was founded in March of 2014 by veteran publishing and investment executives David Friedman and Kristin Fox. MJINews was designed to fill the need for a reliable and credible source of information for investment opportunities in the nascent legal marijuana industry. MJINews is dedicated to helping entrepreneurs and investors make informed business and investment decisions. You can follow MJINews on Twitter @mmjinvestor.
Search CannabisFN
Press Coverage
Psychedelics Index
Top Videos
Alan Brochstein’s 420 Investor is the go-to community for investors to learn, explore, and profit from the marijuana companies. The main goal of 420 Investor is to provide real-time, objective information about the top marijuana companies in the market in order to help investors capitalize on cannabis.
Matthew Nordgren is an ambitious executive, dedicated philanthropist, and accomplished athlete who brings a unique passion to creating strategic alliances. He has breadth and depth of experience in finance, corporate development, and capital sourcing, as well as in building highly motivated teams of skilled professionals. In 2005, Mr. Nordgren received his education at the University […]
Christina Lake Cannabis Corp. is a licensed producer of cannabis under the Cannabis Act.
Innovium is a global beverage and foods brands platform that builds on consumer market trends and takes them to scale.
Network Partners
About CFN Media Group
CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.
Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.
Copyright © Accelerize Inc. · All Rights Reserved · Privacy Policy · Legal Disclaimer
