Intro:
Douglas A. Kahn and Howard Bromberg from the University of Michigan Law School critically examine IRS Section 280E’s implications for cannabis businesses. Their work highlights how federal tax laws challenge the financial sustainability of the cannabis industry, despite state-level legalization.
Key Points:
- IRS Section 280E Explained:
- A federal provision that disallows most tax deductions for businesses involved in controlled substances under federal law.
- Cannabis businesses can only deduct direct costs of goods sold.
- Economic Ramifications:
- Creates disproportionate tax burdens compared to non-cannabis industries.
- Forces businesses into precarious financial positions, potentially deterring compliance and encouraging black-market activity.
- Broader Implications:
- Limits industry growth and reduces potential tax revenues for states.
- Calls for reform to balance federal and state laws.
The VitalPoint for Providers:
Healthcare professionals advocating for patient access to affordable cannabis treatments should be aware of the financial pressures on the industry. Understanding Section 280E can inform discussions about policy changes that could make medical cannabis more accessible.
Link:
Explore the full analysis at https://repository.law.umich.edu/articles/2320/