June 28, 2022 | Written By Cannabis Practice Group
June was another big month for cannabis industry developments and their subsequent impacts on the legal community. We are passionate about bringing you the latest in cannabis news and updates in this rapidly developing field and hope you'll share this newsletter with those who might be interested as well. Additionally, hop on over to our YouTube page to check out our videos from the month of June:
Tax Burdens Facing the Cannabis Industry: 280E’s Impact
280E (26 U.S. Code § 280E - Expenditures in connection with the illegal sale of drugs) has long been the bane of many a cannabis retailers' existence. When it comes to cost of doing business, 280E states clearly that "no 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. In short, what this means is that the traditional expenses that a "normal" business can deduct for federal taxes are not available for cannabis businesses. This of course has placed many cannabis businesses that are already dealing with cash flow issues and lack of traditional banking access in a precarious position of having to account for higher costs to their business, which is extended to consumers, and is in large part why black markets still exist all over the country.
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Attorney General Provides Guidance on Federal Cannabis Enforcement Policy
Back in April 2022, Senator Brian Schatz (D-Hawaii) questioned Attorney General Merrick Garland during a Senate Appropriations subcommittee hearing, asking the AG whether he intended to reissue guidance encouraging federal prosecutors to use discretion in marijuana cases in states where the plant is legal either through a medical and/or adult-use program. Such a move would resurrect aspects of the Cole memo, an Obama-era memo issued by then Deputy AG, James Cole, providing federal prosecutors guidance on the handling of marijuana enforcement – essentially stating that the DOJ would not prosecute state-compliant marijuana-related activity.
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Cannabis Health Insurance & Behavioral Health
With the passage of New Mexico Senate Bill 317 – signed into law in 2021 – insurers in the state are now required to cover 100% of the costs of behavioral health services for their customers. Specifically, Senate Bill 317 prohibits cost-sharing on behavioral health services covered by individual or group health insurance policies and health care plans.
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