How Cannabis Businesses Can Deal With Drug Trafficking Tax Code 280E

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California is likely to see a boon to its weed economy in the coming years, with the industry expected to topple $6 billion by 2020. But for many looking to cash in on green, tax code 280E is a major buzzkill.

The tax code 280E specifically targets illegal drug traffickers. Regardless of whether your cannabis enterprise is legal under state law; the federal government still deems marijuana a Schedule I controlled substance, so it’s taxed accordingly. Under 280E, cannabis industry insiders who run businesses that touch the plant — dispensary owners, growers, and product manufacturers — can only deduct “cost of goods sold,” but no other “ordinary and necessary” costs related to running a business, such as payroll, rent, and electricity.

Growers are least impacted by 280E, since the majority of their expenses

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