The cannabis industry is booming, but a provision in the federal tax code is holding it back, two attorneys in the industry said.
The provision, Section 280E, doesn’t allow for tax deductions or credits stemming from trafficking in controlled substances, such as cannabis. The provision means some cannabis businesses owe more money to the IRS than they bring in, and is a frequent subject of litigation.
The issue is increasingly coming into focus as states have moved to legalize marijuana. Last month, New York allowed adults to use cannabis. Progress at the federal level is still politically complicated. Senate Majority Leader Chuck Schumer (D-N.Y.) has said he plans to pursue comprehensive marijuana legislation, although President Joe Biden has yet to endorse full legalization.
On this episode of our weekly podcast, Talking Tax, host Jeff Leon speaks with Iran Hopkins and Jonathan Robbins, two attorneys with the firm Akerman, about why the tax code provision exists and about whether the cannabis industry can flourish if it remains.