Horsford, Cohen Demand Clarity for Cannabis Businesses Navigating Federal Tax Uncertainty

WASHINGTON D.C. – Congressman Steven Horsford (NV-04) and Congressman Steve Cohen (TN-09) today led a letter to Treasury Secretary Scott Bessent and IRS Chief Executive Officer Frank Bisignano urging the Administration to provide clear, timely guidance for state-legal cannabis businesses following the rescheduling of certain cannabis products. The lawmakers specifically called for clarity around federal income tax treatment and emphasized the need to work with federal partners, including the Small Business Administration, to ensure this guidance is widely communicated to businesses navigating the transition.

The letter reads in part: 

“As you know, state-legal cannabis businesses have been denied ordinary business tax deductions and credits due to Section 280E, which prohibits any such deductions for expenditures related to controlled substances listed in Schedules I and II […]3 As a result of qualifying cannabis placement under Schedule III, Section 280E is no longer applicable to qualifying state-legal cannabis-related trades or businesses. This change materially alters the federal tax framework governing the cannabis industry.” The letter continues “As the National Taxpayer Advocate has previously noted, “the IRS must issue guidance and provide education in a proactive and timely manner. Timely guidance is vital to taxpayers, tax professionals, and industry, and it is just good tax administration.”4 The absence of clear and timely guidance for the cannabis industry will leave taxpayers uncertain as to how they can benefit from the tax code—whether it is the treatment of ordinary and necessary business deductions or accessing of tax credits. While we acknowledge that the Treasury has announced guidance is forthcoming 5, we urge swift and clear action. Clarifying guidance will promote uniform compliance, reduce potential tax disputes, and support efficient tax administration.” 

Congressman Horsford recently co-led a letter with Rep. Cohen on seeking the commutation of the sentences of all serving in federal prisons for non-violent marijuana-related offenses. 

See Full Letter Click Here 

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