The Higher Path Collective’s Post

🚨 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

### IRS Issues Guidance on Federal Tax Deductions for Marijuana Businesses The IRS has recently issued guidance regarding federal tax deductions for marijuana businesses, clarifying that Section 280E of the Internal Revenue Code remains in effect until the federal government finalizes the rule to reschedule cannabis. #### Key Points from the IRS Advisory: 1. **Marijuana's Status**: Marijuana remains a Schedule I controlled substance, and the limitations of Section 280E still apply. 2. **Current Law**: Despite the ongoing process to potentially reschedule marijuana from Schedule I to Schedule III, the law has not yet changed. 3. **Refund Claims**: Taxpayers are not entitled to refunds or payments for taxes paid related to Section 280E by filing amended returns. Claims filed by marijuana businesses seeking refunds are not valid. 4. **Section 280E**: This section disallows all deductions or credits for expenses incurred in businesses trafficking Schedule I or II controlled substances, even in states where marijuana sales are legal. 5. **Gross Income Calculation**: Marijuana businesses can still reduce their gross receipts by properly calculating the cost of goods sold to determine gross income. The IRS emphasizes that until a final federal rule is published rescheduling marijuana, the current tax limitations will remain in effect. This guidance addresses the ongoing tension between state-level marijuana legalization and federal tax policy, which continues to treat cannabis businesses differently from other industries for tax purposes. The agency is also taking steps to address the claims being filed by some businesses seeking refunds for taxes paid under Section 280E in previous years. **How do you think this will impact the marijuana industry?** Read more about this development by clicking the post. --- Feel free to share your thoughts and join the conversation on the impact of these regulations on the marijuana industry! https://lnkd.in/g3-aD3Ax

The cannabis industry is over-taxed. Here's the reality: - Studies consistently show that legal cannabis does not lead to increased youth access. - Contrary to common misconceptions, our presence does not increase crime rates. - We don't bring down home values; we revitalize dilapidated buildings and improve neighborhoods. - Cities and counties with access to legal cannabis often experience fewer opioid overdoses. Yet, despite our positive contributions, cities and states are taxing us to the brink of extinction. Excessive taxes and predatory development agreements are forcing cannabis businesses to shut down across the state. We aren't asking for special treatment—just fair treatment. It's time for policymakers to recognize the value we bring and stop treating us like a cash cow.

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

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 [email protected] or contact @Stephanie Jeffries in our business development team. #420CPA #cannabis

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

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.

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

Understanding NY’s Marijuana Regulation and Taxation Act New York’s Marijuana Regulation and Taxation Act (MRTA) is revolutionizing the state’s legal and economic environment. Since its passage, the MRTA has legalized adult-use cannabis and established a comprehensive framework for regulation, licensing, and enforcement. Key Features of the MRTA Licensing Requirements: Dispensaries, cultivators, and processors must obtain appropriate licenses to operate legally. Taxation: Cannabis sales are taxed at 13%, contributing to state revenue while raising compliance challenges for businesses. Consumer Protections: The law ensures transparency and safety through stringent product labeling and quality standards. Real-World Implications In 2024, New York authorities intensified enforcement against unlicensed cannabis dispensaries. A high-profile case in Brooklyn resulted in over $50,000 in fines and product confiscation, underscoring the importance of adhering to regulatory standards. Legal Implications for Entrepreneurs Navigating New York’s cannabis regulations can be overwhelming. Entrepreneurs face complex requirements, high taxes, and enforcement risks. Legal professionals, such as those at Portale Randazzo LLP, are essential allies in navigating licensing, compliance, and litigation challenges. What’s Next? The MRTA represents significant progress in legalizing cannabis but poses challenges for small businesses and minority-owned enterprises. Staying informed and proactive is crucial for success in this evolving market. Whether you’re a business owner or consumer, understanding your rights and responsibilities under the MRTA is vital. For expert guidance, turn to trusted legal advisors like Portale Randazzo LLP.

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