On May 26, amicus briefs from the National Cannabis Industry Association and the Marijuana Industry Group—in collaboration with the Cannabis Trade Federation action group—were filed in the Ninth Circuit U.S. Court in support of the Oakland dispensary Harborside‘s tax appeal.
The letters offer the sort of persuasion it will take to get Section 280E of the U.S. Tax Code declared unconstitutional. Harborside is appealing a U.S. Tax Court decision from 2018.
WeedWeek reporter Hilary Corrigan examined the case:
- Harborside is contesting its bill for the tax years 2007-2012. The company argues that personnel and quality-control costs; curing, storing and guarding inventory; and trimming, manicuring and packaging should all be deductible.
- The NCIA argues, 280E, which dates from the early 1980s, “intended to punish criminal drug operators by stripping their ability to claim deductions on their tax returns. So, while ordinary businesses can deduct expenses such as rent, wages, taxes, and license payments, under § 280E lawful state marijuana dispensaries are taxed by the IRS on revenue before accounting for those expenses. This provision has the effect of subjecting State-sanctioned marijuana businesses—like Appellant Harborside Health Center (“Harborside”)—to unprecedentedly high effective tax rates of up to 75%.”