As the legal medical and recreational marijuana markets multiply and grow in the U.S., cannabis business people have found themselves in a dense thicket of vague laws. The reason for this vagueness is a matter of convenience. It’s a whole lot easier for a lawmaker or police authority to apply some old law to the legal cannabis market than it is to write and pass a new one.
That’s how we ended up with making butane concentrates prosecutable by the same law as cooking meth in California. That’s how businesses like banks doing above board business with certified cannabis caregivers got charged with federal racketeering (for conspiring to do business with a company that technically breaks the federal law. And now, that’s how an old Reagan-era tax law aimed at stopping an illegal drug dealer from deducting their drugs on their taxes turned into another of many, many road bumps for cannabis entrepreneur.
Section 280E of the federal tax code specifies that the costs of selling federally controlled substances can’t be deducted. It may not seem like such a huge deal, but it unfairly stigmatizes marijuana businesses and limits the amount and kinds of business they can do. In particular, Section 280E says costs like advertising marijuana can’t be deducted. Which means that advertising and marketing for cannabis business people would be harder than it is for anyone in nearly any other industry including alcohol, tobacco, and state-legal prostitution.
Section 280E is a holdover from the Reagan administration “just say no” years. Former Presidential candidate Bob Dole penned the section. One can only hope that the nation’s laws will sooner or later catch up with the times.