Two Republican lawmakers are looking to advance a bill that will block tax breaks for cannabis businesses even if marijuana is rescheduled.
The DEA still counts cannabis as a Schedule I controlled substance and Internal Revenue Code Section 280E disallows all deductions or credits for any amount paid or incurred in carrying on any trade or business that consists of trafficking in a Schedule I or II controlled substance.
However, the DEA may consider moving cannabis from Schedule I to Schedule III, which would free cannabis from enforcement under 280E. But even if rescheduling happens, those tax breaks may not come along with the regulatory change.
Senator James Lankford (R-OK), joined by Senator Pete Ricketts (R-NE), last week introduced legislation to prevent marijuana businesses from deducting business expenses from their taxes. They called marijuana rescheduling a "loophole."
“Marijuana doesn’t make our families stronger, our streets safer, or our workplaces more productive. Businesses who sell federally illegal drugs—including marijuana businesses—shouldn’t get federal tax breaks. This bill clarifies federal tax law to make sure a federally illegal product does not have a federally legal tax deduction,” said Lankford in a statement.
“We thank Senator Lankford for his strong leadership in both fiscal responsibility and drug policy. The federal government should not be in the business of giving tax relief to the federally illegal, addiction-for-profit marijuana industry. This legislation would prevent deficit increases while ensuring that taxpayers don’t foot the bill for the revenue gap made by tax write-offs for people who choose to violate federal law and poison our kids,” said Dr. Kevin Sabet, President and CEO of Smart Approaches to Marijuana (SAM), in a statement.
