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Taxation of Cannabis (Marijuana)

Conclusive Guide on Taxation of the New Green

  • Price

    $49

  • Total Credits

    2 CPE

Taxation of Cannabis (Marijuana)

Overview

Overcoming tax challenges in marijuana business

The fact that marijuana possession and use remain illegal under federal law affects both recreational and medical uses. The legislators and tax expert agreed that because marijuana is classified as a Schedule I drug, meaning, among other things, that it has no tax credit benefits.

The sale and distribution of cannabis for recreational or medical use have become a powerful economic engine generating billions in annual revenue with 33 states and the District of Columbia having some form of legalization of the substance. Despite state relaxation of marijuana prohibition laws, without careful planning, the taxation of regulated marijuana businesses can result in hefty tax assessments and penalties. Cannabis businesses are accounting for and reporting the results of their operations with gross receipts, cost of goods sold (COGS), and other deductions just like other for-profit businesses. However, as long as marijuana remains a Schedule 1 controlled substance under federal law, these businesses must navigate the pitfalls of complex federal and state tax rules.

Marijuana sales are legal and taxed in nine states. States currently levy three types of marijuana taxes: as a percentage of price (either the retail or wholesale price), based on weight (i.e., per ounce), and based on the drug’s potency (i.e., THC level). Some states use a combination of these taxes.

Although prohibited under federal law, the possession of marijuana for recreational use is legal in 17 states and the District of Columbia. However, setting up a tax and regulation system takes time, so not all of these states collect tax revenue.

How much revenue do state and local governments raise from Marijuana taxes?

That is the carrot dangled before many states. In December 2019, it was reported that since January 2018, California’s cannabis sales had generated 411.3 million in excise tax, $98.9 million in cultivation tax, and $335.1 million in sales tax. The Massachusetts Cannabis Control Commission reported in November 2019 that in the first year of opening marijuana retailers, $393.7 million was generated in gross sales.

In this CPE virtual conference, the speaker Jonathan Grossberg  will discuss several aspects that affect the taxation of companies in the cannabis industry including different types of entities to own a cannabis business Federal, state and local taxes including IRC Sec.280E Court cases.

Canceled

Continuing Education Credits

The sessions of the conference qualifies for

  • 2 CE Credit for all AFSP
  • 2 CPE Credit of Taxes for CPA (US)
  • 2 CE Credit of Federal Tax Related Matters for EA
  • 2 CE Credit for all Oregon Tax Preparer
  • 2 CE Credit for all CTEC
  • 2 CE Credit for all Maryland Tax Preparer

Speakers

Jonathan Grossberg

Jonathan Grossberg

Owner , Grossberg Continuing Education

Jonathan D. Grossberg, J.D., LL.M. (Taxation) is a licensed attorney in Pennsylvania and New York.  He is Assistant Editor, National Income Tax Workbook published by the Land Grant University Tax Education Foundation, Inc., and Adjunct Professor of Law, Temple University Beasley School of Law.  Until August 2020, he was Assistant Professor of Taxation at Robert Morris University (RMU) School of Business in Moon Township, PA.  Jonathan has taught a wide variety of tax courses to undergraduate, graduate, and law students, including federal income taxation, taxation of business entities, tax procedure, advanced income taxation, tax research, corporate tax, and international tax.  Before entering academia, Jonathan clerked for Judge Gale of the U.S. Tax Court and practiced tax law at Drinker Biddle & Reath LLP in Philadelphia and Milbank, Tweed, Hadley & McCloy LLP in New York.  Jonathan has written articles for academic and practitioner publications and made CLE/CPE presentations to lawyers and accountants on a variety of topics including tax and business ethics, judicial doctrines in tax law, partnership tax, tax issues facing small businesses, and universal basic income.

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Session Details

Jonathan Grossberg
Jonathan Grossberg

Date

Oct 12th, 2021

Time

12:00 PM – 01:00 PM
1 Credits

Legislative Developments in the Regulation and Taxation of Cannabis (Marijuana) at the Federal, State, and Local Level

The much-anticipated proposed Senate bill that would legalize marijuana on the federal level was made public on July 14, 2021, by its lead sponsor, Senate Majority Leader Charles Schumer (D-New York). Called the Cannabis Administration and Opportunity Act, it removes marijuana from the Controlled Substances Act (CSA) and allows states to determine their own cannabis laws, similar to the way alcohol is federally regulated. Revenue generated by federal taxes would support restorative justice and public health and safety research. 

The bill’s Senate sponsors note that federal cannabis reforms are especially urgent as more states legalize the adult and medical use of cannabis. They point to the fact that today more than 90 percent of Americans believe cannabis should be legal for either adult or medical use.

The possession of marijuana for recreational use is legal in 17 states and the District of Columbia. However, setting up a tax and regulation system takes time, so not all of these states collect tax revenue.

Learning Objectives

  • To discuss the proposed changes in federal law
  • To discuss the current state wise tax laws for cannabis
  • 1 CE credit of for all AFSP
  • 1 CPE credit of Taxes for all CPA (US)
  • 1 CE credit of Federal Tax Related Matters for all EA ( Course No. GEHNZ-T-00642-21-O )
  • 1 CE credit of for all Oregon Tax Preparer ( Course No. GEHNZ-T-00642-21-O )
  • 1 CE credit of for all CTEC ( Course No. 6273-CE-0611 )
  • 1 CE credit of for all Maryland Tax Preparer ( Course No. GEHNZ-T-00642-21-O )

Subject Area:

Taxes,Federal Tax Related Matters

Course Level:

Basic

Instuctional Method:

Group Internet Based

Pre-requisites:

Advance Preparation:

Jonathan Grossberg
Jonathan Grossberg

Date

Oct 12th, 2021

Time

01:00 PM – 02:00 PM
1 Credits

The Constitutionality of Section 280E and Recent Cases on the Federal Income Taxation of the Cannabis (Marijuana) Industry

Number of states have relaxed state law prohibitions on the use of marijuana for medical and recreational purposes. Under federal law, marijuana remains classified as a Schedule I controlled substance under the Controlled Substances Act (CSA).

The Schedule I status of marijuana means that marijuana businesses are treated differently from many other businesses for tax purposes. Internal Revenue Code (IRC) Section 280E (Section 280E) denies deductions and credits for amounts paid or incurred in carrying on the trade or business of trafficking-controlled substances (within the meaning of Schedules I and II of the CSA) in violation of federal or state law. Consistent with marijuana’s classification as a Schedule I controlled substance, Section 280E disallows taxpayers from taking tax deductions and claiming tax credits attributable to marijuana businesses.

Major topics covered 

  • How are marijuana business taxpayers treated differently than business taxpayers engaged in activities that do not violate federal law?
  • How does section 280E work?
  • What prompted the enactment of section 280E?
  • Does section 280E apply to marijuana business in states where marijuana is legal under state law?
  • Does section 280E violate the Eighth Amendment’s excessive fines clause?
  • How would legislative proposals alter taxes on marijuana business?

Learning Objectives

  • To discuss the constitutionality of section 280E
  • To discuss recent cases on the federal income taxation of the cannabis (marijuana) industry
  • 1 CE credit of for all AFSP
  • 1 CPE credit of Taxes for all CPA (US)
  • 1 CE credit of Federal Tax Related Matters for all EA ( Course No. GEHNZ-T-00643-21-O )
  • 1 CE credit of for all Oregon Tax Preparer ( Course No. GEHNZ-T-00643-21-O )
  • 1 CE credit of for all CTEC ( Course No. 6273-CE-0612 )
  • 1 CE credit of for all Maryland Tax Preparer ( Course No. GEHNZ-T-00643-21-O )

Subject Area:

Taxes,Federal Tax Related Matters

Course Level:

Basic

Instuctional Method:

Group Internet Based

Pre-requisites:

Advance Preparation:

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