280E Tax Reform Effort Still Alive, Senator Says

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A Colorado Republican’s effort to remove a decades-old tax penalty that forces some cannabis businesses to pay effective tax rates of more than 70% fell short last week, as Sen. Cory Gardner’s proposed amendment to the Senate tax bill failed to make it into the final legislation.

Speaking to Marijuana Business Daily on Thursday, however, the Colorado Republican said he’s still pushing the amendment as the House and Senate come together to hammer out the differences between their two tax bills. With enough support, the provision could be added back into the tax plan Congress ultimately sends to President Trump.

“We, right now, continue to push it in conference committee,” Gardner told MJ Biz. “It’s an uphill climb, but we’re not giving up on it.”

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Gardner also told MJ Biz that the amendment didn’t make it into the Senate version of the tax bill because supporters didn’t receive an analysis from the Joint Committee on Taxation before the full Senate voted on the bill.

Initial reports said Gardner pulled back the amendment over concern there wouldn’t be enough votes to pass the measure given its price tag. As the lawmakers were considering the tax bill, Gardner reportedly said his amendment could cost upward of $5 billion.

It’s not clear how the provision received that score from the Joint Committee on Taxation if, as Gardner told MJ Biz, supporters didn’t receive an analysis from the committee prior to their vote. Leafly’s email to his press secretary and phone messages left at the both his Denver and Washington, DC, offices were not immediately returned Friday. A message left at his DC office following last week’s passage of the Senate tax bill also went unreturned.

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IRS Section 280E, adopted in the 1980s to penalize organized crime and drug cartels, prevents federally illegal businesses from claiming standard business deductions on their tax forms. Gardner proposed amendments that would exempt state-legal cannabis businesses from the penalty.

As approved, the Senate’s tax bill is expected to cost the federal government $1.4 trillion over the next decade, due largely to significant cuts to corporate tax rates.