To get to the point, repeal of federal tax Code section 280E might cost the federal government some $1.3 billion in 2020 alone, and then rise steadily after that. Right now, section 280E says sellers of federally illegal drugs can’t deduct advertising, marketing, or selling expenses. They can deduct only cost of goods sold. They […]

California Board of Equalization elected Member Jerome Horton, an opponent of Proposition 64, came up with an October surprise to illustrate a weakness in the proposal. That weakness didn’t prevent its passage, but it lingers. Member Horton alleged that a tiny, technical, last-minute drafting change in the California 2016 marijuana initiative could cost the state […]

Here is an SEC filing from a company that wants to be a tax-advantaged REIT, renting to marijuana companies: “We are a newly-formed, self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Initially, we intend to acquire our properties […]

A non-California-centric condensation of Best Marijuana Taxes Yet: California’s Proposition 64. Marijuana legalization is reaching new heights of public approval, and voters will see new ballot proposals in five states this November. Weak taxes taint four of the initiatives — Arizona’s Proposition 205, Maine’s Question 1, Massachusetts’s Question, and 4 Nevada’s Question 2. But California’s Proposition […]

Two devastating traps threaten taxes on newly legalized marijuana. One is the quicksand of inflexibility, leading to impotence during a whirlwind of market change. The other is playing favorites, opening an abyss of tax evasion. California’s Proposition 64, on the ballot in November, avoids those traps better than any marijuana initiative voters have ever seen. […]

I give California’s Proposition 64 very high marks for tax structure, avoiding two deadly tax traps “better than any marijuana initiative voters have ever seen..” I asked Rachel Barry, a public health expert and my good friend and conscientious colleague on the Newsom-ACLU California Blue Ribbon Commission on marijuana legalization, what she thinks of Proposition […]

Here’s how to start low and go slow: Not just phase-ins of rates, but staged effective dates for each new excise tax or tax base, one by one—that’s the insight from the Hoover Institution’s Alvin Rabushka’s enormous Taxation in Colonial America, now discounted to under $30 in paperback. RAND-Vermont put it this way: “The simplest, […]

Why did John D. Rockefeller, Jr., look for safe ways to deal with alcohol, and so commission the study, “Toward Liquor Control,” that recommended state monopoly sales? My view, which I tweeted, is: “Rockefeller liked but couldn’t maintain alcohol Prohibition; faced reality with retreat to state liquor stores.” My friend Kevin Sabet replied, “Actually, Rockefeller […]

As states legalize marijuana, more marijuana businesses are opening across the country. An obscure 1982 brainchild of Bob Dole’s Senate Finance Committee, section 280E of the federal tax code, is hitting state-legal marijuana sellers in the pocketbook—right now. 280E, which says taxpayers cannot deduct costs of selling federally illegal drugs, is not just helping fund […]

3 scenarios: Repeal of the 280E would be scored as a revenue loser by the Joint Tax Committee. Repeal of the Controlled Substances Act, or legislative removal of marijuana from the CSA’s bad list referred to in 280E, would be scored as a revenue loser by the Congressional Budget Office in coordination with Joint Tax.   For example, […]

First, here is the text of 26 U.S.C. § 280E, Expenditures in connection with the illegal sale of drugs: No 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 (or the activities which comprise such trade […]