Will the Dragon Now Be Slayed?
26 USC Section 280E statesNo deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.
(Added Pub. L. 97-248, title III, § 351(a), Sept. 3, 1982, 96 Stat. 640.)
This articles serves to illustrate the unintended and abusive use of Section 280E, which like many legislative pronouncements, came about from good intentions, bus has morphed into a dragon of a tax provision that torments compliant cannabis businesses, and has long since strayed from its original objective.