Republican senators aim to kill 280E hopes

Republican Senators James Lankford of Oklahoma and Pete Ricketts of Nebraska filed a bill last week that would kill the 280e  tax hopes even if cannabis was moved to a lower scheduled controlled substance. The bill is titled, “No Deductions for Marijuana Businesses Act.”

The bill seeks to change Section 280E of the tax code which has kept cannabis companies from taking normal business deductions. Without being able to take this tax deduction, it has negatively impacted business profits. The industry had high hopes that with rescheduling, they would begin to be able to take these deductions and show themselves to be more profitable.

The new bill specifically calls out marijuana to not be allowed the tax break whether its a Schedule 1 or 2 drug.

‘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— ‘‘(1) marijuana (as defined in section 102(16) of the Controlled Substances Act (21 U.S.C. 802(16))), or ‘‘(2) controlled substances (within the meaning of schedule I and II of the Controlled Substances Act),

Smart Approaches to Marijuana CEO Kevin Sabet. “This legislation would prevent deficit increases while ensuring that taxpayers don’t foot the bill for the revenue gap made by tax write-offs for people who choose to violate federal law and poison our kids. When SAM’s federal affairs team pitched Senator Lankford on this bill last year, it was just a pipe dream. But in a short couple of months, the senator’s team took the idea and ran with it. We are grateful for his courage in standing up and doing the right thing. We look forward to this bill gaining support and hopefully being added to the budget reconciliation package.”

Not so fast

John Fraser, leader of Dykema Gossett PLLC’s cannabis practice, told Law360 he was skeptical that the bill would go anywhere, given that cannabis reform is popular across demographics.

“I’d be skeptical that this bill is going to go anywhere, let alone become law,” Fraser said in an article on Law360. “I doubt it makes it out of committee.”

David Culver, senior vice president of public affairs at the U.S. Cannabis Council, said in a statement Friday: “Americans overwhelmingly support cannabis rescheduling and banking reform. The proposed legislation is straight out of the prohibitionist playbook. If enacted, it would be a gift to the illicit market and a blow to legal cannabis consumers. Regulated cannabis businesses simply want to be treated like any other business.”

Read more at: https://www.law360.com/cannabis/articles/2294575/gop-sens-file-bill-to-make-pot-co-tax-penalty-permanent-?copied=1