“Section 280E hampers companies striving to make cannabis accessible for consumers and medical cannabis patients in all legal states.”
Sometimes things can be simultaneously funny, totally serious, and a little bit silly. The stunt that MariMed pulled in Boston Harbor today fit all three of those descriptions, with members of the multistate cannabis company’s management team decked in colonial costumes performing for a worthwhile cause.
Per MariMed, the patriots were “inspired by the Boston Tea Party’s 250th Anniversary” to “decry [the] unfair IRS code 280E.” According to the federal government, the section says that while “Marijuana business owners can deduct their cost of goods sold, which is basically the cost of their inventory,” “What isn’t deductible are the normal overhead expenses, such as advertising expenses, wages and salaries, and travel expenses, to name a few.”
“Section 280E is a prime example of the unique obstacles that legal cannabis businesses must navigate that significantly increase the cost of conducting business,” MariMed explained in a statement before setting sail. “When calculating their taxes, Section 280E prevents the deduction of ordinary business expenses associated with ‘trafficking’ a Schedule 1 or 2 controlled substance.”
They continued, “Approximately 90% of U.S. adults support its legalization, yet cannabis remains classified as a federally illegal Schedule 1 controlled substance by the U.S. federal government, on par with heroin. Due to Section 280E, cannabis businesses pay much more in taxes than they would if it were repealed, according to Wolf & Company.”
As an example of the continued prohibition the industry faces—even in a state where grass is legal—their protest was moved from its original launch, with various potential hosts along the waterfront not wanting to be involved with cannabis or poking the feds in the eye. They couldn’t be stopped though, and once aboard the Liberty Star schooner, MariMed management tossed wooden boxes overboard with the word “WEED” stamped on them and chanted, “NO TAXATION WITHOUT REPRESENTATION.” (The boxes were empty and fished out of the water by helpers in a dinghy behind them).
“MariMed is among the most-sound financial companies in cannabis, with top-selling brands in the markets we serve,” MariMed CEO and President Jon Levine said. “Our protest was less about us and more to provide a voice for the entire industry. Section 280E is unfair and hampers companies striving to make cannabis accessible for consumers and medical cannabis patients in all legal states. It should be repealed. Doing so would remove an obstacle to our mission to improve people’s lives every day through cannabis.”
Levine added, “We applaud some of the states where we operate, including Massachusetts, Illinois and Maryland, plus the 17 others that have approved laws providing cannabis businesses relief from 280E.”
Meanwhile, on the local front, dispensary owners across the state are arguing that they are being taxed without representation in another way as well, specifically in regard to Host Community Agreements and so-called community impact fees. The Massachusetts Cannabis Control Commission is scheduled to address HCAs in its meeting tomorrow.
As for 280E, we’ll have to wait on Washington for that one, but as the MariMed execs stressed this afternoon, people can and should urge their representatives to take action.
