The U.S. Supreme Court again took a pass on a cannabis business tax case, marking another legal setback for industry advocates attempting to overturn Section 280E of the federal tax code.
The Court decided not to hear any arguments in an appeal from Eric Speidell, owner of Colorado-based The Green Solution. Speidell’s argument is that the IRS lacked the authority to request state information as part of investigations into alleged federal tax crimes.
The argument was an attempt to limit the IRS’ power under Section 280E. The problem for all cannabis related business is that Section 280E prohibits standard business deductions for any company that traffics in Schedule 1 or 2 controlled substances. As a result, this creates a substantial tax liability for cannabis related companies.
There have been other legal attempts to override Section 280E and challenge the IRS tax laws, but to no avail. Cannabis companies throughout the U.S. must file under Section 280E because cannabis remains federally illegal.
U.S. House Judiciary Chair Jerry Nadler (D-NY) recently reintroduced a social justice-focused marijuana legalization bill known as the MORE Act with hopes that the Democratic president and Congress will result in the legislation’s passage. House passed a similar version of the bill in the previous Congress but was shot down by the Republican controlled Senate.
The MORE Act would legalize Marijuana federally by removing the plant from the federal Controlled Substances Act. By descheduling marijuana, Section 280E does not come into play for cannabis related companies. It also would create new opportunities for cannabis and ancillary businesses across the country as more states are legalizing adult use.
With 68% of Americans supporting marijuana legalization, there is increasing pressure on federal lawmakers to reform marijuana policies.