One of the nation’s most influential conservative groups is endorsing bipartisan Congressional legislation to give marijuana businesses a tax cut or, more accurately, to tax them just like any other business.
Under an obscure federal tax provision known as 280E, cannabis providers are not allowed to take business expense deductions that are available to companies in other industries. But that could change under one of several proposals in Congress this year, and with the support of a top GOP-connected insider.
“The fact is, marijuana businesses that are operating legally should be entitled to the same deductions and credits under the tax code as any other business,” Grover Norquist, president of Americans for Tax Reform, wrote in a letter to lawmakers.
A bill sponsored by Congressman Carlos Curbelo (R-FL) and Congressman Earl Blumenauer (D-OR) would prevent the 280E penalty from being applied to cannabis businesses that operate legally in accordance with state law. The legislation currently has six other cosponsors, all Democrats.
And Sens. Ron Wyden (D-OR) and Rand Paul (R-KY) filed a companion bill in the U.S. Senate, along with two other Democratic cosponsors.
“Passage of the Small Business Tax Equity Act will remove the arbitrary and punitive measures of the tax code that treat legal marijuana businesses as illegal,” Norquist wrote, referring to the 280E bills. “All members of Congress should have no hesitation supporting and co-sponsoring this important legislation.”
The anti-tax crusader suggested previously that a 280E fix could also be tacked on to broader tax reform legislation that President Trump and Congressional Republicans are expected to reveal this week.
Norquist said he’s already discussed the issue with House and Senate leadership, and believes there’s a good shot to include the marijuana language in the comprehensive tax bill “if some of the libertarian Republicans made that a condition of voting for the whole package.”
The 280E provision was enacted in 1982 in an effort to stop drug traffickers from taking tax credits and deductions on private yachts and the like.
“Today, it is hitting legal businesses across the country resulting in federal income tax rates close to 90 percent,” Norquist wrote in a letter to Curbelo and Blumenauer last month.
In 2009, Norquist joined a sign-on letter urging Congress to pass legislation letting states legalize marijuana without interference. Such a policy “would free federal law enforcement resources for the more urgent tasks of thwarting, apprehending, and prosecuting international terrorists or murderers,” the letter said. “As a matter of States’ rights, regulating marijuana and alcohol seem indistinguishable; and, alcohol policy has been entrusted to the States since the repeal of Prohibition in 1933.”