House Rep. Earl Blumenauer (D-OR) reintroduced a bipartisan proposal yesterday that seeks to let state-licensed cannabis companies throughout the country take the standard tax deductions afforded to any normal U.S. business. Originally co-sponsored by Reps. Blumenauer, Nancy Mace (R-SC), and Barbara Lee (D-CA), the Small Business Tax Equity Act addresses IRS Code Section 280E, a 1982 provision that prohibits the standard business tax deductions for operations associated with illegal drug trafficking and which — because the plant remains a federally scheduled substance — has vexed modern, state-legal cannabis operators for years.
If approved, the bill would exempt state-legal cannabis companies from the restrictions of 280E. The proposal has been introduced in previous sessions but never advanced.
In a press release following the latest unveiling of the bill, NORML Political Director Morgan Fox said the cannabis advocacy group “commends the sponsors of this legislation for their efforts to end the unjust federal overtaxation of licensed, state-regulated cannabis businesses.”
“Allowing [cannabis companies] to take the same federal tax deductions that most other businesses enjoy will facilitate new opportunities in the legal cannabis industry and make it more competitive with the unregulated market, which will directly benefit consumer health and public safety,” Fox said.
“The unfair application of the outdated 280E provision on state-licensed cannabis businesses is preventing our industry from reaching its full economic potential and our ability to successfully replace criminal markets in accordance with the will of the voters and state legislators that have implemented modern state marijuana programs across the country,” said National Cannabis Industry Association CEO Aaron Smith in a statement. “We commend Congressman Blumenauer and the bill’s original co-sponsors for leading this narrowly-crafted, sensible legislation that would resolve this unforeseen consequence and bring our tax code into the 21st century.”
Adult-use cannabis has been legalized in 21 U.S. states and a recent Pew Research Center report found that 48% of Americans have local, legal access to cannabis products. (Full Story)