As the U.S. Drug Enforcement Administration weighs whether to revise marijuana to a Schedule 3 controlled substance, regulated cannabis producers are looking forward to the prospect of easing their heavy tax burdens under section 280E of the federal tax code.
Moving marijuana to Schedule 3 from Schedule 1 would end 280E’s effect on the cannabis industry, allowing state-regulated companies to “deduct, for federal income tax purposes, all their ordinary and necessary business expenses, the same as any other company would do,” said Thomas W. Ostrander, a partner with Philadelphia-headquartered law firm Duane Morris.
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The law firm is advising the cannabis industry of several key tax implications of rescheduling:
Past taxes paid under 280E are unlikely to be refunded. Unpaid past taxes due under 280E would probably still be owed. If rescheduling is completed sometime in 2024, it’s possible that 280E taxation on the cannabis industry
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