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A legal weed company recently re-enacted the Boston Tea Party to protest the federal government’s onerous cannabis tax laws.
Massachusetts cannabis firm MariMed staged the protest aboard an old-school schooner in Boston Harbor last month. Dressed in colonial garb, company employees re-enacted the 250th anniversary of the original “no taxation without representation” revolt by throwing wooden boxes labeled “weed” overboard. The event was staged to protest 280E, an obscure IRS tax code that makes it especially difficult for state-legal cannabis businesses to turn a profit.
In an accompanying press release, MariMed CEO Jon Levine said that the protest was designed to “provide a voice for the entire industry. Section 280E is unfair and hampers companies striving to make cannabis accessible for consumers and medical cannabis patients in all legal states. It should be repealed. Doing so would remove an obstacle to our mission to improve people’s lives every day through cannabis.”
Section 280E prohibits any business that handles Schedule I or II drugs from taking standard business deductions on their taxes. This forces all legal weed businesses to pay taxes on their gross income instead of their net income. In contrast, literally every other business is allowed to subtract huge deductions for supplies, rent, advertising, and many other standard business expenses from their total taxable profits.
“Rooted in the 1980s, this outdated tax legislation was crafted to prevent drug dealers from claiming any business expenses on their taxes,” explained Lucas McCann, co-founder of cannabis compliance consulting firm CannDelta, to High Times. “In a modern twist of coincidence, today’s cannabis businesses operate legally under state law but are still treated as illicit businesses, federally speaking, because cannabis is still listed as a Schedule I substance.”
Financial analysts have estimated that this tax law forced the US cannabis industry to pay $1.8 billion in additional taxes last year. Between 2020 and 2030, the industry will have to cough up an estimated $65.3 million in federal taxes. But if 280E did not exist, the industry would only have to pay around $30.1 billion over that same time frame. Or in other words, this tax law is forcing legal weed businesses to pay double the amount of taxes than any other business has to.
Cannabis-friendly politicians have proposed numerous bills that would put an end to this outdated tax tyranny. The House has passed legislation to reform cannabis banking regulations on six separate occasions, but the Senate has shot it down and its chances of passing seem slimmer every day. States like New York and Massachusetts at least allow legal pot businesses to take deductions on their state taxes, but this is only a drop in the bucket when compared to the burden of federal taxes.
Levine told High Times that lawmakers are still floating bills to revise federal cannabis regulations, but none of these new bills include “language about eliminating 280E. The most likely path to the elimination of 280E is for cannabis to be rescheduled or de-scheduled altogether. President Biden has asked the Department of Health & Human Services for an opinion about that, but nothing’s happened yet. Just another example of the slog in DC as it pertains to federal cannabis reform.”
Chris Moore via (https://merryjane.com/news/cannabis-company-re-enacted-the-boston-tea-party-to-protest-federal-cannabis-taxes)
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