Lawmakers to Introduce 280E Reform

Originally posted MJ Investor News April 13, 2015 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...

The Transition of Cannabis in the USA

Legal to Illegal to Semi-Legal The Transition of Cannabis in the USA In the 1970s, many places in the United States started to abolish state laws and other local regulations that banned possession or sale of cannabis. The same thing happened with marijuana sold as medical cannabis in the 1990s. All this is in conflict with federal laws; cannabis is a Schedule I narcotic according to the Controlled Substances Act of 1970, which classified cannabis as having high potential for abuse, no medical use, and not safe to use without medical supervision. Medicinal preparations of cannabis became available in American pharmacies in the 1850s following an introduction to its use in Western medicine. Around the same time, efforts to regulate the sale of pharmaceuticals began, and laws were introduced on a state-to-state basis that created penalties for mislabeling drugs, adulterating them with undisclosed narcotics, and improper sale of those considered “poisons”. A 1905 Bulletin from the US Department of Agriculture lists twenty-nine states with laws mentioning cannabis. Eight are listed with “sale of poisons” laws that specifically mention cannabis: North Carolina, Ohio, Wisconsin, Louisiana, Vermont, Maine, Montana, and the District of Columbia. In some states where poison laws excluded cannabis, there were nonetheless attempts to include it. The Pure Food and Drug Act was then passed by the United States Congress in 1906 and required that certain special drugs, including cannabis, be accurately labeled with contents. Previously, many drugs had been sold as patent medicines with secret ingredients or misleading labels. In New York, reform legislation began under the Towns-Boylan Act, which targeted all “habit-forming drugs”, restricted their sale, prohibited...