Rep. Earl Blumenauer (D-OR) introduced the Small Business Tax Equity Act (H.R. 2643) on April 17, 2023, a bill that will allow cannabis businesses to obtain tax write-offs for ordinary business expenses.

Currently, cannabis businesses are not able to deduct business expenses under a provision of the tax code known as Section 280E, which prohibits such deductions for Schedule I or Schedule II controlled substances. The bill would amend Section 280E to allow ordinary business expenses to be deducted when the company’s business consists of sales of cannabis conducted in compliance with state law.

The proposed bill has bipartisan cosponsors including Reps. David Joyce (R-OH), Brian Mast (R-FL), Nancy Mace (R-SC), Barbara Lee (D-CA), and Danny Davis (D-IL). The bill has been referred to the House Committee on Ways and Means for further consideration.

Of course, the congressman’s bill would be moot if the President Biden’s administrative rescheduling process moves cannabis to Schedule III, IV, or V. Rescheduling to Schedule III, IV, or V would solve the 280E tax issue without the need for an additional legislative fix. Congressman Blumenauer has asked for more transparency around the president’s process.

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Photo of Tommy Tobin Tommy Tobin

Thomas Tobin’s practice focuses on complex commercial litigation and class action matters involving statutory, constitutional, and regulatory issues in a range of industries, including food and beverage, consumer packaged goods, and cannabis. In the food and beverage sector, Tommy has experience defending false…

Thomas Tobin’s practice focuses on complex commercial litigation and class action matters involving statutory, constitutional, and regulatory issues in a range of industries, including food and beverage, consumer packaged goods, and cannabis. In the food and beverage sector, Tommy has experience defending false advertising claims and consumer protection claims for well-known international corporations.

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Elizabeth Gustafson has extensive experience with intellectual property and trademark litigation, antitrust, internal and government investigations, and breach of contract claims.