MJ Consulting has acquired tax opinions regarding the combining of two related businesses together for the purpose of tax consequence sharing. The first business is your cannabis business, and the second is an online ticket broker.
The Tax Problem for Cannabis Related Businesses
The Internal Revenue Code Section 280E states the following in regards to businesses operating in the medical marijuana industry:
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.
Even though 25 states have medical marijuana laws (and two of those states now allow marijuana to be consumed without a doctor recommendation), the IRS is applying section 280E to deny business deductions to cannabis related businesses. Cannabis businesses that operate legally under state law argue that section 280E should not be applied because Congress did not intend the law to apply to businesses that are legal under state law. But the IRS asserts that it was the intent of Congress to apply the provision to anyone “trafficking” in a controlled substance, as defined under federal law (as stated in the text of the statute). Thus, Section 280E is at the center of the conflict between federal and state laws with respect to medical marijuana.
Our 280E Solution Allows for Normal Deduction of Expenses
Custom ticketing websites are turnkey, cost effective ways to generate new revenue while giving your cannabis related business some much needed help. Examples can be seen by clicking one of the links below.
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