State-legal cannabis industry operators would finally be able to take federal tax deductions that are available to any other business under a congressional bill that was filed on Friday, seeking to amend an Internal Revenue Service (IRS) code known as 280E.
The legislation was introduced by Rep. Nancy Mace (R-SC) with days left in session in the 117th Congress. While the text isn’t currently available, its short title is identical to versions of the Small Business Tax Equity Act that were filed in previous sessions.
The IRS code that’s currently in place, 280E, makes it so businesses whose activities consist of “trafficking in controlled substances (within the meaning of Schedule I and II of the Controlled Substances Act)” cannot make deduct most business expenses from their federal taxes or receive tax credits, even though they are still obligated to pay taxes like any other company.
The provision was enacted in 1982 as a way to prevent drug traffickers from writing expenses off their taxes, but it is widely applied today on state-licensed cannabis growers, processors, and dispensaries, greatly increasing their effective tax rates as compared to businesses in other industries.
Read more at marijuanamoment.net
