Next Week's Webinar: Cannabis Tax Landscape Insights

The tax landscape for the cannabis industry continues to evolve at a rapid rate. While the IRS maintains that IRC §280E applies until cannabis is formally rescheduled by the DEA, a growing number of tax and legal professionals are challenging its application ahead of rescheduling, relying on statutory interpretation and pending litigation.

Where a cannabis business has a more-likely-than-not basis for claiming deductions otherwise disallowed under §280E, and files a professionally prepared return that clearly discloses and supports that position, the operator is not required to voluntarily pay tax on phantom income. In addition, businesses may seek to recapture previously disallowed deductions by filing properly prepared amended returns within the applicable statute of limitations.

Key topics of discussion will include:

• Distinguishing Sources of Authority: Clarifying the hierarchy between the Internal Revenue Code, Treasury Regulations, and subregulatory guidance such as IRS announcements, fact sheets, notices, and bulletins, and why that distinction matters when evaluating §280E positions.

• Litigation Update, New Mexico Top Organics v. Commissioner: Reviewing the current status of the case, the legal arguments being advanced, and the potential implications for operators challenging the continued application of §280E.

• Risk Assessment, Filing Without §280E and Amending for Refunds: Evaluating the technical standards, disclosure considerations, audit exposure, and practical risks associated with prospective filings that do not apply §280E, as well as amended refund claims.

• Statutes of Limitation and Protective Refund Claims: Understanding the applicable time limitations for amended returns, preserving rights for refund, and when protective claims may be appropriate.

Attendees will gain a clear understanding of the options available if they are considering challenging §280E, including the potential outcomes of moving forward without reducing deductions under §280E, amending prior returns, and how to report these positions in a compliant manner to mitigate the risk of penalties and IRS action. This session is designed to help you understand your choices and make an informed decision.