Tag Archives: 280E

David Feldman

Trump Will “Probably” Support Gardner Cannabis Bill

On the White House lawn this morning, getting ready to leave for the G-7 summit in Canada, Pres. Trump made positive comments about the cannabis bill introduced yesterday by Sen. Cory Gardner (R-CO) and Elizabeth Warren (D-MA). The STATES Act would allow states the freedom to legalize cannabis within their borders with no federal enforcement action permitted. The text of the Senate bill, just released, removes state legal cannabis from enforcement under the Controlled Substances Act.

On the lawn, the President said of the bill, “I probably will end up supporting that, yes.” He said, “We’re looking at it,” but also noted that he “really” supports Sen. Gardner. Of course the bill has to be passed by Congress before being sent to the President. The question is whether the process can be completed before the “silly season” of midterm elections brings most legislative activity to a stop. Trump promised to support a bill like this in exchange for Sen. Gardner resuming approval of judicial nominations, which he had stopped after Attorney General Jeff Sessions rescinded an Obama-era memo de-emphasizing federal enforcement against actors in cannabis legal states.

The House version of the bill was introduced this morning but text is not yet available. The initial sponsors will be Rep. Jared Polis (D-CO), David Joyce (R-OH) and Earl Blumenauer (D-OR). The bill also appears to effectively repeal IRS Code Section 280E which prevents cannabis companies from deducting ordinary business expenses. It also removes activity by cannabis companies being assumed to be money laundering, which will hopefully help more banks to take cannabis companies as customers. Certainly a dramatic potential development.

Patricia Heer

SCOTUS Could Take Up 280E

There may be no greater thorn in the side of a cannabis producer, processor or retailer than section 280E of the Internal Revenue Code.  Section 280E prohibits businesses engaged in trafficking substances prohibited under the Controlled Substances Act (CSA) from claiming certain deductions and credits on their federal income-tax returns.

In October 2017, a Colorado cannabis retailer, the Green Solution Retail, Inc. petitioned the U.S. Supreme Court to review a decision which held that federal laws, specifically the Anti-Injunction Act and the Declaratory Judgment Act, preclude challenges to the IRS assessments of taxes, as such challenges to disputed sums must be determined in a suit for a refund or deficiency.  Green Solution argues in its petition that its claims against the IRS are not challenging the IRS’s assessment or seeking to restrain it, but rather its claims are challenging the IRS’ administrative authority to make determinations as to whether Green Solution is criminally culpable under the CSA.  Green Solution pleads that it is concerned about the IRS sharing information it gains as part of the assessment with the Department of Justice (DOJ) potentially triggering criminal repercussions for the dispensary under the CSA.  Last week, the Government filed its response to Green Solution’s petition, urging the Supreme Court to deny the request for review.  The Government takes the position that any investigation by the IRS of Green Solution’s activities is part and parcel of its assessment of the retailer’s allowable deductions and tax liability.  Consequently, the Government argues that such a challenge to the IRS’s assessment activities is barred by the Acts.

This is not the only case against government entities involving  cannabis issues before the courts.  A case commenced by Marvin Washington and other plaintiffs seeking to hold the Controlled Substances Act unconstitutional is scheduled to be heard next week (in connection with the Government’s request that the court dismiss that case).  Could these two cases be the pressure at the judiciary level that result in a reevaluation of the social and political positions on federal drug laws criminalizing cannabis? While Justice Neil Gorsuch, during his tenure on the Tenth Circuit, ruled against owners of another dispensary that were fearful of the IRS sharing information with the DOJ in connection with an IRS audit, Justice Gorsuch also stated in that decision that the federal government was sending mixed messages about distribution of cannabis and he was skeptical about the IRS not divulging information with the DOJ.