Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Saturday, January 27, 2018

Imagining a productive tax break for marijuana businesses to provide drug education

Images-22Last week I spotlighted this article published at the Cannabis Law Report titled "An Introduction To The Internal Revenue Code For Cannabis Businesses." The piece was authored by Chris Nani, a student in my Marijuana Law & Policy seminar last semester, and now available here via the Cannabis Law Report is another part of his taxing treatment.  The piece is titled simply "Part II: My Proposed Tax Break," and here is an excerpt:

While there is still federal prohibition, Congress should incentivize current marijuana businesses to perform desirable social policy goals in exchange for tax deductions. Because taxes are so astronomically high for marijuana businesses such as dispensaries, by adding an amendment to § 280E Congress could specifically tailor it to marijuana businesses or include all scheduled I and II drugs. I elected to make it about all scheduled I and II drugs.

Under § 280E, the proposed amendment would read:

“Any scheduled I or II drug business that pays federal income taxes, regardless of its legality, is applicable to deduct from its expenses any activities that meet the following: (i) educational programs that demonstrate health risks and safety procedures for the drug(s) the business is involved with (ii) informational programs that display the short and long-term risks of the drug(s) the business is involved with and (iii) informational programs that educate on how to identify the signs of an overdose and how to properly treat it for the drug(s) the business is involved with.”

Just like any statute, my proposed § 280E amendment is vulnerable to abuse, but hopefully the legislative history would be able to give guidance to the IRS and courts if litigation arose. The social goal aimed at this amendment is public health. By increasing awareness and knowledge of a drug, the user will be able to make better judgment calls and more accurately understand the consequences of their actions.

Now, to fully dissect the language of my proposed amendment.  The first sentence applies to any scheduled I or II drug regardless of its legality. This includes drugs such as heroin, LSD, and marijuana along with prescribed drugs such as Adderall, Fentanyl, and OxyContin.  All of the drugs listed have side effects and can damage the human body. By educating the public on the health risks and safety procedures for the drug, heroin dealers and marijuana dispensaries both could reduce their federal income taxes. I believe it’s better for a heroin addict to understand the deadliness of the drug and how to properly use it beforehand to help minimize the chance of death. Similarly, for marijuana, dispensaries could receive a deduction while showing consumers how to properly use a bong or smoke a blunt while discussing the health consequences of smoking. It would allow dispensaries to showcase their products and demonstrate any new innovative ways to use marijuana while additionally educating the public on how to properly use a device.

Prior related Post:

"An Introduction To The Internal Revenue Code For Cannabis Businesses"

 

https://lawprofessors.typepad.com/marijuana_law/2018/01/imagining-a-productive-tax-break-for-marijuana-businesses-to-provide-drug-education.html

Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Medical Marijuana Commentary and Debate, Recreational Marijuana Commentary and Debate, Taxation information and issues | Permalink

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