The Burdens of 280E

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The Burden of 280E

Most people would say something like “You’re in the medical marijuana business? You must be loaded!” Major misconception. Especially when considering that 280E stands in the way of these dispensary business models.

If you go to (https://www.law.cornell.edu/uscode/text/26/280E) you can see the law in its entirety, but let me tell you what it is in a nutshell. During the 80s obscene amounts of cocaine were being smuggled into the U.S. which these groups had started import and distribution companies and were actually writing off staff and equipment on their TAXES. So, the federal government implemented 280E, which made it illegal for these groups to write off normal business expenses because the business in itself was illegal.

280E is applied to medical cannabis dispensaries, so they too cannot write off their normal costs of doing business; even being a legal business under their state laws/guidelines they are still illegal in the federal eye. So, what does this mean? For starters the federal government takes about 50% of a dispensary’s profits (and I’m being generous to the dispensaries) right out of the gate in taxes. Then there is the expense of staff (God help you if you’re a state that needs a Pharmacist. Do you have any idea what they cost?), security (both guards and/or equipment are expensive), utilities, internet, computers, software systems (point of sale and office related systems), banking, credit/debit systems, insurance, rent, maintenance, facility upkeep/upgrades, supplies (office/retail), advertising, website, social media, legal services, licenses, permits, zoning, delivery/shipping, packaging, charity donations, staff moral team building, and of course the products you’re selling to your patients/customers. But in this case we can write off the costs of goods, but that’s it and nothing else. Not much is left after that when you think about it in the form of a business.

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