Monthly Archives: December 2018

U.S. Tax Court Judge Upholds § 280E; Strikes Industry’s Hopes

On November 29, a U.S. Tax Court judge confirmed that § 280E of the Internal Revenue Code prevents state-legal cannabis businesses from deducting ordinary and necessary business expenses from their federal taxes. The ruling is a blow to businesses in the cannabis industry, who incur significantly higher federal tax burdens than they otherwise would if, like other businesses, they were allowed to deduct their business expenses.

Section 280E declares that “[n]o deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business .… More