Issue: Lawmakers have reintroduced legislation in the cannabis space aimed at fixing the tax code and promoting social justice reforms. “The Small Business Tax Equity Act” is sponsored by Rep. Earl Blumenauer (D-OR), along with Reps. David Joyce (R-OH), Barbara Lee (D-CA), and Nancy Mace (R-SC) and The HOPE Act which is cosponsored by Reps. Dave Joyce (R-Ohio) and Alexandria Ocasio Cortez (D-N.Y.),
““ATACH firmly believes that the Controlled Substance Act and 280E provisions of the Internal Revenue Code are being misapplied to legal businesses and merits immediate Congressional intervention and relief,” said Michael Bronstein, president, American Trade Association for Cannabis & Hemp
Impact: “The Tax Equity Act” would amend the Internal Revenue Code to allow deductions and tax credits related to expenditures in connection with state compliant marijuana sales. Under existing Internal Revenue Service (IRS) code 280e, businesses involving controlled substances cannot deduct business expenses from their Federal taxes or receive tax credits. This has long been the most important goal of cannabis industry advocates as it would at least level the playing field for state compliant businesses.
“The HOPE Act” would incentivize states to expunge the legal records of individuals with non-violent cannabis convictions through a Justice Department “State Expungement Opportunity Grant Program.” The program would be funded with $2 million annually and help cover the administrative costs associated with identifying eligible individuals for relief. “The HOPE Act” will likely be involved in any cannabis package that comes to the Floor this year.
Next Steps: “The Tax Equity Act” has been introduced several times but has never progressed to a hearing or a vote but the push for 280e reform continues. Separately, Senate Banking Committee Chairman Sherrod Brown (D-OH) has recently urged lawmakers to take action on financial services access for cannabis companies through the SAFE Act and said he is under the impression that the White House will support the legislation. Passing cannabis reform in the Republican controlled House remains daunting, but lawmakers are trying to craft an acceptable compromise package that would include the Democrats’ social justice provisions and keep at least some Republican support through financial services reform.