Ryan Holz, a Partner in Locke Lord’s Chicago office and member of the Firm’s Cannabis Industry Group, was quoted in a Chicago Daily Law Bulletin article addressing the taxation of legalized marijuana after the Illinois Cannabis Regulation and Tax Act was signed into law. Under IRS Code Section 280E, cannabis companies are not permitted to take usual business deductions because marijuana continues to be classified as a Schedule 1 illegal substance under federal law. In regard to how this affects the cannabis industry in states where marijuana has been legalized, Holz said, “I think, generally speaking, cannabis companies have priced that into their cost of doing business at this point.”
Holz also noted he doesn’t foresee Section 280E being the subject of significant litigation in Illinois, but instead predicts a potential adjustment in tax law at the federal level. “Congress is going to do something about banking and taxation here at some point, it may not be this year, but sometime soon, they will, in our opinion. When they do, I highly suspect 280E will disappear or be very much modified to allow state legal entities to get the same deductions as other companies do,” he said.
To read the full article, click here (subscription may be required).
Sign up for our newsletter and get the latest to your inbox.