420 with CNW — GOP Congresswoman Files Measure t
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Posted On: 01/10/2023 4:52:53 PM
420 with CNW — GOP Congresswoman Files Measure to Amend IRS Code So Cannabis Businesses Can Obtain Tax Relief
Last week, a legislation that would allow legal and licensed operators in the cannabis industry to receive federal tax deductions that are offered to other businesses was introduced in Congress. The bill, which was introduced by Representative Nancy Mace, seeks to revise section 280E of the Internal Revenue Service code.
Section 280E prohibits businesses involved in activities comprised of trafficking in substances classified under the Controlled Substances Act such as marijuana, from receiving tax credits or deducting expenses from their taxes. This is despite the fact that these entities are still required to pay taxes like other businesses.
This section was enacted more than four decades ago to stop drug traffickers from writing off expenses on their taxes. Today, it is applied to state-legal cannabis cultivators, processors and stores, which significantly increases the tax rates of these businesses, in comparison to companies in other industries.
Legislators have, in previous sessions, tried to change the provision to allow state-legal cannabis businesses to be treated like businesses in other markets. However, Since the bill was introduced with only days left in the previous session, it will have to be reintroduced in the next session of Congress.
The last version of the legislation was sponsored by Representative Earl Blumenauer, who also sponsored the SAFE Banking Act. This bill has been cleared by the House more than five times, with many hopeful that its approval would fix some issues in the cannabis industry. However, it was not enacted after stalling in the Senate once again.
This comes as states such as Pennsylvania and New Jersey continue to offer some tax and banking relief for marijuana industry operators in their jurisdictions. As a whole, however, the cannabis industry continues to face challenges caused by prohibition.
The only guidance the Internal Revenue Service has provided explains that while marijuana businesses can’t apply for standard deductions, Section 280E doesn’t prohibit these businesses from decreasing their gross receipts by properly calculating cost of goods sold to determine their gross income.
This update was issued in response to a report by the Treasury Department, which saw the inspector general for tax administration criticizing the IRS for not sufficiently advising taxpayers operating in the cannabis industry on federal tax law compliance. The treasury report also directed that the IRS offer guidance for the cannabis industry.
Congresswoman Mace wasn’t the only Congress member to file a bill to reform drug policy with a few days left in the last session. Representative Matt Gaetz also reintroduced a measure to promote studies of cannabis. He has filed the legislation in previous sessions.
If these reforms to the federal tax code are passed, it could potentially make a big difference to the bottom lines of marijuana companies such as Flora Growth Corp. (NASDAQ: FLGC) because of the tax relief secured.
NOTE TO INVESTORS: The latest news and updates relating to Flora Growth Corp. (NASDAQ: FLGC) are available in the company’s newsroom at https://cnw.fm/FLGC
Please see full terms of use and disclaimers on the CannabisNewsWire website applicable to all content provided by CNW420, wherever published or re-published: http://CNW.fm/Disclaimer
Last week, a legislation that would allow legal and licensed operators in the cannabis industry to receive federal tax deductions that are offered to other businesses was introduced in Congress. The bill, which was introduced by Representative Nancy Mace, seeks to revise section 280E of the Internal Revenue Service code.
Section 280E prohibits businesses involved in activities comprised of trafficking in substances classified under the Controlled Substances Act such as marijuana, from receiving tax credits or deducting expenses from their taxes. This is despite the fact that these entities are still required to pay taxes like other businesses.
This section was enacted more than four decades ago to stop drug traffickers from writing off expenses on their taxes. Today, it is applied to state-legal cannabis cultivators, processors and stores, which significantly increases the tax rates of these businesses, in comparison to companies in other industries.
Legislators have, in previous sessions, tried to change the provision to allow state-legal cannabis businesses to be treated like businesses in other markets. However, Since the bill was introduced with only days left in the previous session, it will have to be reintroduced in the next session of Congress.
The last version of the legislation was sponsored by Representative Earl Blumenauer, who also sponsored the SAFE Banking Act. This bill has been cleared by the House more than five times, with many hopeful that its approval would fix some issues in the cannabis industry. However, it was not enacted after stalling in the Senate once again.
This comes as states such as Pennsylvania and New Jersey continue to offer some tax and banking relief for marijuana industry operators in their jurisdictions. As a whole, however, the cannabis industry continues to face challenges caused by prohibition.
The only guidance the Internal Revenue Service has provided explains that while marijuana businesses can’t apply for standard deductions, Section 280E doesn’t prohibit these businesses from decreasing their gross receipts by properly calculating cost of goods sold to determine their gross income.
This update was issued in response to a report by the Treasury Department, which saw the inspector general for tax administration criticizing the IRS for not sufficiently advising taxpayers operating in the cannabis industry on federal tax law compliance. The treasury report also directed that the IRS offer guidance for the cannabis industry.
Congresswoman Mace wasn’t the only Congress member to file a bill to reform drug policy with a few days left in the last session. Representative Matt Gaetz also reintroduced a measure to promote studies of cannabis. He has filed the legislation in previous sessions.
If these reforms to the federal tax code are passed, it could potentially make a big difference to the bottom lines of marijuana companies such as Flora Growth Corp. (NASDAQ: FLGC) because of the tax relief secured.
NOTE TO INVESTORS: The latest news and updates relating to Flora Growth Corp. (NASDAQ: FLGC) are available in the company’s newsroom at https://cnw.fm/FLGC
Please see full terms of use and disclaimers on the CannabisNewsWire website applicable to all content provided by CNW420, wherever published or re-published: http://CNW.fm/Disclaimer
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