Mark Collins MBA’s Post

🚨 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

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.

The landscape of the cannabis industry is rapidly evolving with states increasingly moving towards legalization. However, federally, cannabis remains a Schedule I controlled substance, and that creates significant hurdles for the cannabis business. Learn more about the ins and outs of cannabis tax law in this article from Nick Lipresti #tax #IRS #Cannabis #CannabisTaxation #IRSCode280E

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

What is Section 280E and how does it impact the cannabis industry? ⛔Internal Revenue Code Section 280E prohibits businesses from taking deductions or credits for any amount that was paid or incurred as part of “any trade or business if such trade or business…consists of trafficking in controlled substances.” 💵Because Schedule III controlled substances are not included in the Section 280E prohibition, the rescheduling of cannabis provides possible tax relief opportunities for the cannabis industry. ⚖️Tax attorneys are advising cannabis businesses to prepare for potential tax benefits after the Drug Enforcement Administration’s (DEA) recent recommendation to reschedule cannabis from a Schedule I to Schedule III. The rescheduling should enable cannabis companies to be taxed at the same or similar rate as conventional businesses. 🧮Conventionally, a business expense must be “ordinary and necessary” to be deductible. The IRS has not published any guidance on which categories of expenses will satisfy “ordinary and necessary” in the cannabis industry. 📜It is expected that there will be no retroactive tax penalty relief. However, this could be subject to change if new legislation is introduced. 🔍Additionally, rescheduling may require a reevaluation of cost of goods sold as business expenses once Section 280E is no longer applicable. More on cannabis banking laws and 280E on CannabizMD : https://lnkd.in/eSue2EgC #section280E #cannabislaw #cannabispolicy #cannabisrescheduling #deaschedule #scheduleiii

Tensions escalate as a significant clash emerges over the future of cannabis legislation in the Golden State. Delve into the complexities of this heated battle, exploring the diverse perspectives and implications for the burgeoning cannabis industry. #californiacannabis #legalization #cannabispolicy #thehigherpath #industryinsights

In December 2023, Catalyst Cannabis Co. filed a significant lawsuit which is shedding light on California's stringent cannabis regulations and taxes. Here our partners at 420 CPA (ABFinWright, LLP) call out the specific regulations like Regulation 3802 and amendments to Regulation 3700, sparking a broader conversation about the necessity for fairness and transparency in the state's cannabis industry. Read on below to find what the say in the article, and how this underscores the urgent need for a more balanced regulatory landscape. They outline how Elliot Lewis's work for Catalyst is good for the well-being of the entire cannabis community. For help on your cannabis company's financial needs, contact info@420CPA.com or contact @Stephanie Jeffries in our business development team. #420CPA #cannabis

280E Cannabis Tax Update! The Tax Court yet again ruled that 280E is NOT unconstitutional for a state-law allowed cannabis businesses in Patients Mutual Assistance Collective Corp. v. Comm'r. And . . . while this case was going on, the AICPA has requested guidance from IRS/Treasury on how 280E will apply if and when cannabis is moved from Schedule I to Schedule III. Regardless, 280E still applies to cannabis businesses. We are not quite there for cannabis businesses to start claiming deductions. https://lnkd.in/eUB62Nws #280E #cannabis #marijuana #taxpolicy #taxupdates #taxdeductions #cannabistaxation

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.

MAJOR ANNOUNCEMENT for companies in the #cannabis industry! This week the DEA stated that cannabis will change from Schedule I (e.g. heroine) to Schedule III! This will have a monumental impact to the industry including #taxes and the notorious Section 280E. Cannabis companies need to focus on opportunities to optimize tax positions for this change. See below for just a few (👇). Send me a message to discuss how you can take advantage of all possible tax minimization strategies! 👉 Ordinary and necessary business expenses would be deductible to cannabis companies as IRC Section 280E would no longer apply 👉 Property and equipment would be eligible for bonus depreciation 👉 Inventory costing methodologies – Opportunities may allow for exclusion of certain expenses from cost of goods sold and immediate deduction through operating expenses 👉 Availability of the Research and Development Credit 👉 Availability of Clean Electricity Investment and/or Production Credits 👉 Opportunities to delay operating expenses in the 2023 tax year to deduct them in 2024 and later years