Cannabis Tax Attorney Jennifer Benda in Weed Week - Harborside Appeals for 280E Relief
June 3, 2020
California-based Harborside Health Center, one of the country’s largest dispensaries, is challenging an industry-hated section of the tax code in federal court.
Last week, the company appealed a 2019 U.S. Tax Court ruling that found it had underpaid its taxes by $11M between 2007 and 2012. The discrepancy relates to section 280E of the federal tax code which denies tax deductions and credits to businesses dealing in illegal drugs. The cannabis industry has long fought 280E since it blocks deductions that other businesses can take and results in a far higher tax rate.
Jennifer Benda, a tax attorney and shareholder at Hall Estill who represents the two groups, said she regularly deals with the IRS on cannabis business tax issues. The agency relies on the Tax Court opinion on Harborside to deny expenses. Overturning that decision and expanding the amount of inventory costs that Harborside can include would provide guidance for other businesses, Benda said.
“This will help the industry if we can get some guidance,” she said.