Miscellaneous
Florida's Cannabis News Podcast Wednesday November 11, 2020 Cannabis Taxation—Part II—President Nixon's War on Drugs Reshaped the Internal Revenue Code This is Part II of Florida's Cannabis News Podcast's five-part series on cannabis taxation. Today we are continuing the story of 280E into the 1970s and 80s. We are talking about the War on Drugs, the controlled substances act, President Reagan’s attempt to regulate drug use through the tax code, and breaking down the text of 280E itself. Part II is important to understanding how 280E came to be. I am looking forward to unpacking everything. So lets dive right into the highlights: America and cannabis have a well-documented industrial and medicinal relationship. Around 1611, colonist farmers cultivated America’s first cannabis crop and used the plant as fiber for rope and clothing. Public concern about illegal drug use rose in the 1930s due to the FBN’s media campaign that warned Americans of the alleged perils of cannabis. The 1960s, almost thirty years after the passage of federal cannabis prohibition, brought dramatic social change to the United States, and in many ways, cannabis was at the center of it. In 1971, with the goal to stop drug use in the United States, President Nixon declared a war on drugs. As part of his war on drugs, President Nixon enacted the Comprehensive Drug Abuse Prevention and Control Act of 1970, which has lasting effects on today’s United States cannabis market. With the enactment of Section 280E, if a taxpayer trafficked a Schedule I or II substance, they lost the ability to deduct virtually all business expenses under Section 162, except for cost of goods sold. On its face, Section 280E contradicts the originally stated purpose of the Code—to tax all income regardless of the legality of the enterprise. The desired result of Section 280E was to burden drug traffickers when they filed federal income tax for their business by disallowing virtually all business expense deductions of their illegal enterprise. Section 280E reaches further than Section 162 because Section 280E even disallows deductions for expenses that are not illegal per se (e.g., salaries, rent, telephone) to businesses who traffic Schedule I or II substances. In comparison, Section 162 only disallows deductions for illegal expenses. Section 280E is outdated because trafficking cannabis is legal in thirty-three states and D.C. Section 280E does not satisfy the expectations for any of its goals: combatting the flow of drugs into the United States, significantly reducing drug use, or having an educational impact. _______________________ Love the show? Rate, Review, Subscribe, and Share with your Friends. Connect on Instagram: @FLCannabisPod Connect on Twitter: @FLCannabisPod Like Our Facebook Page: https://bit.ly/36bGsAQ My Email: David@FloridaCannabisPod.com My YouTube Channel: https://bit.ly/3oPZkOq Donate to My PayPal: https://bit.ly/3ezF92l