In January, we published an article in this newsletter on the state of cannabis taxation, including a discussion of the crippling impact of Internal Revenue Code §280E (IRC §280E) on the industry. Since that article was published, the industry has been shaken and encouraged by the news that Trulieve Cannabis Corp. received refunds totaling $113 million from the Internal Revenue Service (IRS). To date, Trulieve has refused to divulge the specific basis for the refunds, citing competitive, trade-secret, and pending litigation reasons. In an article in Cannabis Business Times posted on February 29, however, it was reported that Trulieve CEO Kim Rivers responded “yes” to a question on X (formerly Twitter) on whether the refund was related to IRC §280E.[1] In addition to Trulieve, another cannabis business, Ascend Wellness Holdings, has also reported it has amended federal tax returns for several years and is expecting to receive refunds.[2] Before jumping into the speculation as to what the specific basis of the refunds are, it is helpful to briefly review IRC §280E.Continue Reading Tax Refunds for Cannabis Businesses? What Is the Story?

The cannabis industry has experienced significant growth over the past decade, with increasing numbers of states legalizing both medical and recreational use. Currently, cannabis is legal for adults in 24 states and the District of Columbia, and medical cannabis is legal in 38 states and the District of Columbia. However, despite the industry’s rapid expansion, it faces a unique and significant challenge in the form of Internal Revenue Code Section 280E (IRC §280E).[1] This federal tax code provision has a profound negative impact on the profitability of cannabis businesses and causes those businesses to constantly evaluate their operational strategies. In addition to IRC §280E and other federal tax challenges, the industry also faces significant state tax burdens.

Continue Reading The Continuing Negative Impact of Federal and State Taxation on the Cannabis Industry; Where Do We Go from Here?