I spent five days in our Nation’s Capital last week for Lobby Days with the National Cannabis Industry Association, the trade group for legal marijuana businesses. The mood was surprisingly upbeat despite concern about how the Trump Administration and the Session’s Justice Department will deal with state legal cannabis.
My partner, Cory Parnell, and I made the rounds to various House and Senate offices seeking support and co-sponsorships for two pieces of legislation that would fix the two biggest problems facing the legal cannabis industry; access to banking and IRS code section 280E.
Senate Bill 777 & House Bill 1810 Small Business Tax Equity Act of 2017 amends the Internal Revenue Code to exempt a trade or business that conducts marijuana sales in compliance with state law from the prohibition against allowing business-related tax credits or deductions for expenditures in connection with trafficking in controlled substances.
This bill would amend Internal Revenue Code Section 280E that dates back to the 1980s and prohibits tax deductions for drug dealers. Of course, Congress back then could not have envisioned a legal cannabis industry generating billions of dollars in sales and profits. Maybe the time has come to have the Cannabis Industry treated the same as all other tax paying businesses.
H.R. 2215 Secure and Fair Enforcement (SAFE) Banking Act provides a “safe harbor” and additional protections for depository institutions who provide a financial product or service to a covered business.
Banks and other financial institutions are reluctant to provide checking accounts and other services to cannabis businesses due to the plant being illegal at the Federal level. Today, over 30 states have some form of legal marijuana, and these state legal businesses need to be able to deposit their receipts and pay their bills with checks.
Both bills are getting momentum and co-sponsors as they wind their way through Congress. Maybe we have reached a tipping point where cannabis businesses will be recognized as legitimate tax paying entities.