Connect with us


Calls for reform of ‘unfair’ tax code facing cannabis firms



Section 280E prevents businesses from deducting expenses from income associated with the “trafficking” of controlled substances

Business leaders are calling for reform of the Section 280E tax code, which prevents firms deducting business costs from income associated with the “trafficking” of controlled drugs.

After passing new legislation in April that allowed banks to provide services to cannabis companies in states where the drug is legal, the US House of Representatives sent a signal that it may be high time to remove barriers to business for the cannabis industry.

The bill, dubbed the SAFE Banking Act, comes after a major lobbying effort by the American Bankers Association, and still faces headway in the Senate.

Carissa Cartalemi, owner and operator of Star Buds Medical Marijuana Dispensary in Baltimore, says the bill marks a step in the right direction, addressing some of the hurdles facing dispensaries like hers. 

But there’s a long road ahead.

“Because medical cannabis is still federally illegal, we haven’t been able to use credit and debit card processors, online ordering or many financial services that most businesses take for granted,” says Cartalemi, who, along with partners Megan Rogers and Vincent Lidie, opened Star Buds in 2018.

Raising capital to start the business was also a challenge, she says. It wasn’t possible to get a traditional business loan from a bank. Instead, she worked with a consultant to find a private equity investor who would accept cannabis businesses,” she says.

“There are extra hurdles for us when it comes to funding because cannabis is still illegal federally. 

“We’re forced to bootstrap and get creative every single day with how we carry out our business.

CPA and accounting lecturer Samuel Handwerger at the University of Maryland’s Robert H. Smith School of Business says his clients in the cannabis industry have made do, using credit unions for banking activities and raising capital through private investors.

While the latest bill offers cannabis companies some financial reprieve, Handwerger says it fails to address the biggest issue plaguing them – the Section 280E tax code, which prevents businesses from deducting conventional business expenses from gross income associated with the “trafficking” of Schedule I or II substances, as defined by the Controlled Substances Act.

“The industry needs this to change because otherwise, the cost of buying legal cannabis will forever remain above what it should be given that these businesses absorb the tax through their profits,” he says. 

“The result is that they have to charge accordingly in order to be able to turn an adequate profit at the end of the day for those investors, so it’s really unfair for the whole marketplace.”

It’s not an unrealistic goal, Handwerger says, especially considering the growing public support in recent years for decriminalised or legal marijuana.

In a 2020 poll conducted by Gallup, 68 percent of Americans supported the idea of legalising marijuana, up from 12 percent in 1969. 

Thirty-six states have legalised medical cannabis, and 17 states now allow adult recreational use, according to the National Conference of State Legislatures.

Still at issue is whether a state-by-state approach or sweeping federal legislation offers the best pathway toward repealing Section 280E. 

States can take the matter into their own hands and alleviate the burdens imposed by the tax, says Handwerger, but that only addresses the state tax at a rate usually only a fraction of the federal tax burden.

Handwerger says that since “most states define taxable income by using the federal code, you will solve the whole puzzle by getting Congress to amend the tax code.” 

Activists will get more bang for their buck by focusing their efforts at the federal level, getting to the root of the problem, he says.

Cartalemi agrees and says the recent banking reform, coupled with increased scrutiny of the tax law, can help improve public perception and garner more national support for the cannabis industry.

“I think federal law – it guides everything, including people’s opinions,” says Cartalemi. 

“We need to pass this legislation federally for everyone to see that our business should be treated just like every other business.”


Luxembourg delegates visit medical cannabis facility in Portugal

The delegation visited Tilray’s EU-GMP facility in Cantanhede.



Luxembourg delegates visit medical cannabis facility in Portugal
Tilray Medical Hosts Luxembourg Delegation at Tilray's EU-GMP-certified medical cannabis facility in Portugal.
Home » News » Calls for reform of ‘unfair’ tax code facing cannabis firms

Tilray Medical recently welcomed the Government of Luxembourg delegation on its visit to the company’s European Campus in Portugal.

In October 2021, global cannabis company Tilray was named as the supplier of cannabis products for Luxembourg’s medical cannabis programme by the country’s Ministry of Health.

For the programme, Tilray is supplying a variety of its pharmaceutical-grade medical cannabis products, including extracts and dried flower with different levels of THC and CBD for patients with a range of medical conditions.

The recent visit to Tilray’s EU-GMP medical cannabis cultivation and manufacturing facility was organized to give the Luxembourg Delegation a firsthand view of Tilray’s operations in Portugal.

Read more: Tilray launches first medical cannabis oil in Malta market

Tilray’s managing director in Europe, Sascha Mielcarek, commented: “We are honoured to host the Luxembourg Ministry of Health Delegation at our state-of-the-art cannabis facility in Cantanhede, Portugal. 

“Demand for cannabis legalisation in Europe is growing rapidly and we are incredibly proud to service the patients in Luxembourg and around the world with the high-quality medical cannabis products they rely on and in the formats they prefer.”

The delegation included: Paulette Lenert, Deputy Prime Minister and Minister of Health of Luxembourg; H. E. Conrad Bruch, Ambassador of Luxembourg to Portugal; Alain Origer, National Drugs Coordinator; Laura Valli, International Affairs Coordinator; Bob Lessel, Social Health Department; and, Sven Back, Department of narcotics and medicinal cannabis.

At the time of the announcement that Tilray would act as supplier for Luxembourg’s medical cannabis programme, chairman and chief executive officer, at Tilray, Irwin Simon said the company believes its growth potential in the European Union represents a $1bn opportunity, noting that: “We’re proud to be building this unrivaled global platform and will continue to advocate for patient access in Europe and countries around the world.”

Tilray was the first to successfully export medical cannabis from North America and import medical cannabis products into the EU in 2016, and its branded medical cannabis products are now available in 20 Countries around the world as the firm continues to expand its footprint in Europe.

Continue Reading


Thailand becomes first country in Asia to decriminalise cannabis

Under the new law change, people incarcerated on cannabis-related charges will be released from prison.



Thailand becomes first country in Asia to decriminalise cannabis
Home » News » Calls for reform of ‘unfair’ tax code facing cannabis firms

Thailand has now decriminalised the cultivation and trade of cannabis, however, recreational use will remain illegal. 

The production, trading, import and export of cannabis and hemp products for medicinal use is now legal in Thailand. 

Previously, cannabis is was a category five narcotic, however, cannabis and hemp products have been allowed in the cosmetic and food industries since 2020, and the country was the first in Asia to legalise medical cannabis in 2018. It has also been legal in the country for registered companies to sell cannabis products if they contain less than 0.2 per cent of THC.

The move is a bid to increase economic productivity in the country, with the government valuing the industry in excess of USD£2bn (~£1.60bn) according to Thai Health Minister Anutin Charnvirakul. 

Read more: Thailand to propose removing cannabis from controlled substances list

Small operators will not need to register with the Food and Drug Administration (FDA), however, large cannabis-related businesses need FDA approval to produce and market products.

The move follows the decision from the Thai Government in May to hand out one million free cannabis plants to its citizens. Citizens will now be permitted to cultivate cannabis in their own homes as long as it is medical grade and used for medical purposes only.

The country’s Office of the Judiciary has also confirmed that any ongoing criminal cases related to cannabis will be suspended, and those serving prison sentences related to cannabis charges will also be released on a case-by-case basis.

In an interview with CNN, the Minister highlighted that Thai citizens are keen to become investors and producers in the medical cannabis industry.

However, the smoking or use of cannabis in “non-productive ways” will still be prohibited, Charnvirakul has stated. 

Under Thailand’s Public Health Act, those that use cannabis for recreational purposes will still be subject to penalties such as an $800 fine for public consumption and three months in prison.

Speaking to CNN, Charnvirakul commented: “There has never once been a moment that we would think about advocating people to use cannabis in terms of recreation — or use it in a way that it could irritate others.”

Charnvirakul highlighted that the country would have no problem with tourists who wanted to visit Thailand for medical cannabis treatment, but that the country would not be open for recreational cannabis tourism.

Continue Reading


Tetra Bio-Pharma expands into Australia with new research subsidiary

The Canadian company is establishing research company Tetra Bio-Pharma Australia Pty Ltd.



Tetra Bio-Pharma expands into Australia with new research subsidiary
Home » News » Calls for reform of ‘unfair’ tax code facing cannabis firms

Tetra Bio-Pharma has announced the launch of its new wholly owned subsidiary Tetra Bio-Pharma Australia Pty Ltd, an Australian-based research company focused on the execution of clinical trials in Australia.

The new subsidiary follows the recent announcement of Tetra‘s partnership with Cannvalate Pty Ltd for the performance of clinical trials of Tetra’s drug candidates in Australia. Accordingly, TBP-AU will benefit from a 43.5 per cent tax credit on all money spent on clinical trials in Australia.

The development represents Tetra’s second foreign subsidiary and is in line with the company’s global expansion strategy for QIXLEE – a botanical inhaled investigational new drug with a fixed ratio of THC and CBD that meets USA cGMP regulatory requirements – and other future drug candidates.

Read more: Tetra Bio-Pharma receives European orphan drug designation for novel CBD cream

Tetra Bio-Pharma CEO, Dr Guy Chamberland, commented: “We look forward to working with our strategic partners and building value for our current and future investors.

“These are very exciting times for us as we continue to drive scientific excellence and deliver on the promise of cannabinoid-derived transformative medicines to improve patient health and quality of life.”

The company has also announced it has completed the Annual Licence Review process for its Health Canada Drug Establishment Licence (DEL), meeting the regulatory requirements of C.01A.009 of the Food and Drug Regulations to maintain its DEL for the distribution of pharmaceuticals, like REDUVO, in Canada.

Tetra Bio-Pharma has also stated that it submitted its first New Drug Submission (NDS) for REDUVO – a soft gel capsule used to treat chemotherapy-induced nausea and vomiting (CINV) and weight loss and severe nausea in people living with HIV infection – to Health Canada to obtain a Drug Identification Number (DIN) for the prescription drug. The company is now in discussions with Health Canada to address final commentary on the submission.

Continue Reading
Sign up for the Cannabis Wealth newsletter

Recent Posts