Fair Tax Policy
Originally intended to apply to illegal drug dealers when first enacted in 1982, the 280E provision is now primarily applied to medical and adult-use cannabis dispensaries operating legally under state law. The unintended consequences of 280E enforcement on legal businesses threatens the viability of state-licensed cannabis providers, leads to the loss of valuable jobs and tax revenues, and limits businesses ability to grow and invest in their communities. The unfair application of the tax code on legal businesses is also hampering the industry’s ability to effectively compete with illegal drug dealers, who generally do not file or pay taxes at all.
As a result of NCIA’s work, bipartisan support for legislation addressing this problem continues to grow in the U.S. Senate and House of Representatives. If approved, the Small Business Tax Equity Act of 2017 (S. 777 & H.R. 1810) would exempt state-legal cannabis businesses from Section 280E and allow business deductions afforded to other legal industries.
Enacting 280E reform will level the playing field for small businesses in the cannabis industry and allow law abiding businesses to create more jobs, expand employee benefits, and make other investments benefiting local economies. Dynamic economic models prove that by reforming 280E, the industry would ultimately generate up to $1.55 billion in new federal tax revenues over the next ten years.
Resources IRC Section 280E: An Unjust Burden on State-Legal Cannabis Businesses Watch the Section 280E video Federal Policy Overview: Banking, Taxes, and DOJ Protections