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How Cannabis Companies Are Flipping ESOPs Into Tax Win
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Subscribe29 SEP 2025 / ACCOUNTING & TAXES
Cannabis companies are turning to Employee Stock Ownership Plans (ESOPs) to circumvent the burdens imposed by Section 280E, a tax code that prevents them from enjoying standard business deductions and thus leads to substantial tax rates. By converting ownership to employees, ESOPs, already renowned in construction and manufacturing, are emerging as a practical response to the 280E challenge, attracting attention in accounting, finance, and tax fields while further propagating employee engagement and easing succession planning within the cannabis industry.
For decades, cannabis companies have been hustling under the heavy weight of Section 280E, which blocks them from taking the same deductions every other business gets. That’s meant paying tax rates north of 60%, a real backbreaker for an industry already...
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