A decade into legalization, cannabis companies are still locked out of tax deductions for giving back – but that hasn’t stopped them from making a difference.
By Jon Marshall
Businesses give back for a variety of reasons. Whether it is to help meet critical local needs, build deeper relationships with customers or raise brand awareness, supporting the community is often both a moral and strategic business choice. In most cases, businesses are rewarded for their generosity through tax deductions on charitable donations. But many people are surprised to learn that this is not an option for businesses in the cannabis industry.
Despite cannabis being legal for adult use in Nevada for nearly a decade, the industry’s businesses are still subject to outdated federal laws that block them from receiving the same financial tax benefits available to other industries. Few Nevadans realize that when their favorite dispensary donates to a local food bank or sponsors a community event, they are doing so without any tax relief. And yet, many cannabis companies across the state continue to step up in order to give back to the communities they call home.
The Roadblocks to Giving
The biggest barrier for cannabis businesses is a section of the federal tax code known as 280E. Originally designed to prevent illegal drug traffickers from claiming business expenses, 280E now applies to all state-legal cannabis companies because cannabis remains a federally controlled substance. That means everything from charitable donations to marketing costs and even employee benefits is not considered a deductible business expense like they are for other companies.
On top of the taxation challenges, cannabis businesses struggle with limited access to banking, tight restrictions on advertising and promotions, and a rapidly changing patchwork of state regulations. When you look at these barriers, it becomes easy to …
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Author: High Times Contributors / High Times
