I personally went to law school to avoid math, but it inevitably rears its ugly head in practice. Cannabis attorneys should be familiar with both state and federal tax guidelines when advising a business at its inception of a business, as well as during day to day operations. If you’re new to the cannabis industry, be sure to read up on IRS Code 280(e) as well as state specific provisions as they can have a dramatic impact on a company’s bottom line. To color that research, here’s the (entertaining) history behind 280(e):
The IRS prosecuted an alleged drug dealer for back taxes and treated the alleged drug dealer as if they were any other legal business in calculating the amount owed. In response, the alleged drug dealer cleverly responded that if they were to be treated as a legal business, then they should be able to deduct normal business expenses. The judge’s ruling in favor of the alleged drug dealer’s argument prompted legislative action that resulted in the 280(e) code section that we all know and love today.
DISCLAIMER: THIS INFORMATION IS STRICTLY EDUCATIONAL AND DOES NOT CONSTITUTE LEGAL ADVICE