"The Good, the Bad, and the Ugly: Why IRC § 280E Is Not the Industry Killer It Is Portrayed to Be"

The title of this post is the title of  this new paper recently posted to SSRN and authored by Patrick Cleary, a student at The Ohio State University Moritz College of Law.  This paper is the eleventh in an on-going series of student papers supported by Drug Enforcement and Policy Center.  (The ten prior papers in this series are linked below.)  Here is this latest paper's abstract:

Taxes implicate nearly every area of business.  The recent marijuana boom has thrust one tax code provision into the spotlight. IRC § 280E prohibits tax deductions and credits for expenses paid or incurred in the trafficking of Schedule I or II controlled substances.  This increases tax liability for marijuana businesses who commonly refer to the provision as an “industry killer.”  This paper intentionally goes against the grain to show how IRC § 280E is not the “industry killer” it is portrayed to be and explores ways in which slow growth may be marijuana’s best path forward. 

The argument in favor of IRC § 280E is made by explaining the provisions’ development and legal framework before applying it to the marijuana industry . Next, IRC § 280E must be contextualized within the marijuana industry’s rapid growth and the 2017 Tax Cuts and Jobs Act.  Lastly, the Oregon example is used to exemplify how IRC § 280E is helping the industry by providing a check on cash flow and preventing prices from being driven down further through saturation.

Prior student papers in this series:

• "The Canna(business) of Higher Education"
• "Marijuana Banking in New York and Around the US: 'Swim at Your Own Risk'"
• "Intellectual Property Survey: Cannabis Plant Types, Methods of Extraction, IP Protection, and One Patent That Could Ruin It All"
• "Marijuana in the Workplace: Distinguishing Between On-Duty and Off-Duty Consumption"
• "An Argument Against Regulating Cannabis Like Alcohol"
• "The State of Marijuana in The Buckeye State and Fiscal Policy Considerations of Legalized Recreational Marijuana"
• "Race Based Statutes at Play with Cannabis: Cultivating a Process for Weeding Out the Competition"
• "Tribal Cannabis: Balancing Tribal Sovereignty and Cooperative Enforcement"
• "Land of the Free, Home of the (Disgruntled) Brave: The Case for Allowing Veterans Access to Medical Marijuana"
• "Cannabidiol (CBD) in the Therapeutics Industry"