In the chatter within the legal cannabis industry, it seems nothing can be said to be certain, except issues with banking and taxes.
James Thorburn, an attorney and tax specialist, and Lamine Zarrad, a former U.S. Treasury Department employee who now runs cannabis payment tech company Tokken, join The Cannabist Show to address two concerns raised frequently by marijuana business owners.
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280E, a tax code that disallows deductions or credits for money made during the “trafficking” of controlled substances, has become a hot-button item in states such as Colorado, California and Arizona, Thorburn says, adding that cannabis businesses in those states have seen increased attention with audits.
“What you’re seeing, with the pick-up of the audits, is the IRS getting very interested in the industry,” Thorburn says, telling Cannabist editor-in-chief Ricardo Baca. “The idea that the IRS is going to suddenly lose interest, I don’t think that is going to happen.”
Changes to 280E likely will come from either a judicial or political move, he says.
“One of those two things is going to happen,” Thorburn says. “When it’s going to happen, I don’t know.”
As for the banking woes, Zarrad says he couldn’t speak to the Federal Reserve, but adds that his former employer had a “spotty awareness” about the issues and the constraints placed on legal businesses.
“And regulators, by nature, are very reactive, versus being proactive,” he says. “That’s the way, not just culturally, but the way the system is set up.”
But even if cannabis were to be completely descheduled, the industry would still have a banking problem, Zarrad says, likening it to how liquor retailers are considered high-risk accounts.
“Highly stigmatized, by both regulators and banks,” he says.