420 CPA ’s Post

Cannabis Law Now Podcast: Catalyst Cannabis Co. Takes on the California Department of Tax and Fee Administration Over Cannabis Excise Taxes. Since legalizing in 2016, California has experienced rampant rate failure across its licensed cannabis companies. The State of California also has some of the highest and most aggressive cannabis taxes in the nation. In an effort to stave off the California Department of Tax and Fee Administration’s (CDTFA) latest round of rulemaking that would, among other things, extend cannabis excise taxes to cannabis accessories, Catalyst Cannabis Co. (one of the state’s largest cannabis operators) is in a complex challenge with CDTFA over its rulemaking authority, alleged procedural violations, and the overwhelmingly negative impact of such tax rules. In this episode, Husch Blackwell's Hilary Bricken and Anthony Almaz, General Counsel for Catalyst Cannabis, break down and analyze this potential crucial fight between the industry and California’s top tax regulator. https://lnkd.in/gf3r74iE

Using the Farm Bill loophole to Remove 280E Status... Can two things be the right at the same time? Is this the path of least resistance? I am prefacing this post asking for true legal advice from professionals but regarding this article... is this the loophole angle we are all looking for? 1. Could testing plant material from state regulated cannabis companies the same way THCa hemp is tested for COA passthrough for finished goods be used as a defense in this case? Could they claim that although they are state regulated, their test logs indicate that they are selling a federally protected commodity that is no longer under the purview of the Controlled Substances Act as hemp. 2. Could this argument and loophole together be the sidestep around politicians who promise rescheduling, expungement, etc? 3. Cannabis sativa is hemp, hemp is cannabis sativa. This could be argued in court for clarification in this case... is that correct? We used state law to create a cannabis market and federal law created the hemp intoxicant market. If the hemp intoxicant loophole could be used as a focus for why 280E no longer applies, can cannabis companies get tax refunds dating back to 2018 if a precedent is set? The medical cannabis movement was exploited to create a recreational cannabis market and then the farm bill loophole created a new hemp intoxicant market. Now, each market is combating each other while growing the same plant. Closing the farm bill loophole could be closing the door for state regulated cannabis to challenge federal tax rates or am I way off base here? Lawyers please weigh in.

I was delighted to be asked to write this article for Marijuana Venture Magazine on the amazing work of Elliot Lewis CEO of Catalyst Cannabis Co. with my colleagues at 420 CPA (ABFinWright, LLP). Elliot has emerged as a formidable advocate in California's legal cannabis landscape, refusing to back down when faced with stringent regulations and excessive taxation. In December 2023, under his #leadership, Catalyst's parent company filed a lawsuit against key regulatory CA bodies over hastily enacted tax regulations that are detrimental to the industry. This legal action against Regulation 3802 and amendments to Regulation 3700 challenges not just the fiscal burden on his business, but also the broader regulatory hurdles plaguing California's cannabis market. Lewis's efforts transcend his company's immediate interests, embodying a fight for transparency, fairness, and the economic viability of the entire cannabis #community in California. While others may have conceded to the pressures of an unwieldy regulatory environment, Lewis's #determination positions him as an inadvertent hero to retailers, distributors, and consumers alike. His battle is really a lot more than a retailer's crusade; it's a beacon of hope for a fairer, more prosperous future for California's cannabis industry. #420CPA #cannabis

🚨 IRS says: ''Not So Fast Cannabis'' 🚨 Last year, rumors #abounded in Cannabis #CFO circles there was a work around to 280E. Some self-satisfied #backslapping, and self-congratulations #ensued for those who said they found this #elusive work around. But the celebrations were #premature. The Internal Revenue Service has just reinforced that Section #280E is still in full effect, sending shockwaves through the #Cannabisindustry. They posted it on their website Friday evening: https ://https://lnkd.in/gU7sAB-Y The IRS says: ''Marijuana remains a Schedule I controlled substance; Internal Revenue Code Section 280E still applies.'' Despite some multi-state operators (MSOs) like Trulieve, Curaleaf, Cresco Labs, and Green Thumb Industries betting on #taxrefunds, the IRS clarified these claims are #invalid and will be invalidated. This announcement underscores that until Cannabis is de/rescheduled federally, Section 280E remains a significant #challenge. Innovative tax strategies must be grounded in legal and financial prudence so stay informed to navigate these hurdles, subscribe to highlycapitalized.com and never miss breaking news about taxes in #Cannabis

Where do those cannabis tax dollars go? 🤔 A great read to help gain an insight into what happens after consumers make a cannabis purchase! 🍃 Should every state publish these findings? #cannabis #cannabisnews #cannabisculture https://lnkd.in/eqpy494Q

🚨 The IRS has reiterated that cannabis businesses cannot take federal tax deductions available to other industries until a federal rule reschedules cannabis. Despite the move to potentially shift cannabis from Schedule I to Schedule III of the Controlled Substances Act (CSA), Section 280E still applies. The IRS stated, "Until a final federal rule is published, cannabis remains a Schedule I controlled substance and is subject to the limitations of the Internal Revenue Code." This advisory highlights the ongoing challenges faced by the cannabis industry regarding federal taxes. Businesses like Trulieve, which applied for a $113 million 280E refund, and others like TerrAscend and Ascend Wellness, expecting refunds, may not see their claims validated under the current law. The IRS is addressing these claims, but the law, as it stands, disallows deductions or credits for businesses involved in what remains federally classified as illegal drug trafficking. This reminder underscores the complex legal landscape for the cannabis industry as it awaits potential rescheduling and the implications for federal taxation. 🌿💼 #CannabisIndustry #IRSRules #TaxDeductions #CannabisReform #280E #TheHigherPath

🔔 Excited to share! My article on the transfer pricing implications in the U.S. cannabis industry is now published in the IBFD International Transfer Pricing Journal (ITPJ). Huge thanks to the IBFD ITPJ for this opportunity! https://lnkd.in/grsBGsKH 🔰 This article explores how transfer pricing is a critical consideration for U.S. cannabis businesses, particularly those with vertical integration or multi-state operations. While federal classification as a Schedule I substance creates a complex tax landscape, potential reclassification as a Schedule III drug could unlock significant tax opportunities. ✅ One of the key challenges for cannabis businesses is that they are generally not allowed to deduct ordinary and necessary business expenses from their federal income taxes. This is due to a federal tax code provision known as Section 280E. As a result, cannabis businesses must carefully consider their transfer pricing practices to maximize their profitability while minimizing their tax burden. ✅ Cannabis businesses can leverage transfer pricing to maximize Cost of Goods Sold (COGS) mitigating Section 280E's impact by strategically pricing the intercompany transactions between entities of the vertically integrated group, which could include transactions between a cultivator and a processor, or between a processor and a dispensary or between a centralized service provider and the other group’s entities. ✅ Having strong transfer pricing documentation is crucial. A solid transfer pricing study goes beyond just justifying the cannabis business strategies, it can show the IRS that the intercompany transactions are priced at arm’s length avoiding costly adjustments and penalties. ⭐ Connect with us to discuss how transfer pricing strategies can benefit your cannabis business in the evolving tax environment. #TPConsulting #IBFD #Cannabis #TransferPricing

On May 16, 2024, the Drug Enforcement Agency (DEA) officially proposed to reschedule cannabis as a schedule III, instead of a schedule I, controlled substance. This rescheduling will alleviate some difficult operational limitations and financial accounting that cannabis-related businesses have had to endure to avoid a disallowance of their business expenses as deductions for federal income tax purposes. In connection with this new federal government approach to cannabis, Senator Cory Booker has proposed new federal excise tax legislation for cannabis that, if enacted, should spur U.S. development of the cannabis industry. I explore these new developments in the attached Legal Update.

California's cannabis industry is not just growing—it's contributing significantly to the state's revenue. 🌿 💰 In this financial overview, we take a closer look at how cannabis tax revenue is impacting California's economy and what it means for the future of the industry. Whether you're in the cannabis sector or interested in state finance, understanding these numbers is key. Explore the financial insights #CannabisIndustry #CEO #cannabis #cannabisriskmanager #riskmanagement #USA #Tax #california #TaxRevenue #CaliforniaEconomy #CannabisFinance #CannabisBusiness https://lnkd.in/g4s8gawn

There's call for change in the cannabis industry! 🌿 A group of experts was created by the government of Canada to study the legislation that made cannabis legal. The panel is recommending the country review one of the industry’s biggest gripes: excise taxes charged to pot producers. What could this mean for the cannabis industry? Check out the article below for more details: https://loom.ly/bPjGqlw