(2) The cannabis market | Disjointed; Hazy regulations have strange consequences for marijuana firms.
www.economist.com/news/united-st ... nada-price-cannabis
Note:
(a) "After he was busted in 1974, Jeffrey Edmondson, a small-time dealer of marijuana, cocaine and amphetamines in Minneapolis, faced a daunting bills from the taxman for all his illicit income. He argued he should be allowed to deduct $100,000 worth of business expenses, and a court agreed. Enraged, Congress revised the tax code in the early Reagan years, forbidding tax exemptions for drug traffickers."
Jeffrey Edmondson, a/k/a Jeff Edmondson v Commissioner. 42 TCM (CCH) 1533 (1981).
https://scholar.google.com/scholar_case?case=7023484330622532384
(i) There is no need to read this decision, because after reading (b) below, you will know the tax court judge was correct in applying the federal law at the time. That is why Commissioner did not appeal, and why Congress changed the law by adding section 280E afterwards.
(ii) Commissioner is head of Internal Revenue Service, US Department of Treasury.
(iii) TCM is acronym for "Tax Court Memorandum Decisions."
(iv) CCH (company)
https://en.wikipedia.org/wiki/CCH_(company)
(b)
(i) Douglas A Kahn and Howard Bromberg, Tax Treatment of a Marijuana Business. Colum. J. Tax L. - Tax Matters, 8: 23, 23-24 (2017).
https://repository.law.umich.edu/articles/1895/
Quote: "In the absence of a statutory denial, the legal expenses of a business are deductible even if the business itself is illegal. In the 1981 decision of the Tax Court in Edmonson v Commissioner, the court allowed the deduction of legal expenses of an illegal business. The taxpayer was engaged in the illegal business of selling cocaine and marijuana among other drugs. Congress was displeased with that decision and responded by adding § 280E to the Internal Revenue Code. That provision denies a deduction or credit for the business expenses of a business engaged in trafficking in a controlled substance that is listed in Schedule I or II of the CSA if that business is prohibited by either federal or state law. Marijuana is listed in Schedule I, and so the statute disallows all of the expenses of a marijuana business. For example, no deduction is allowed for the rent paid for the use of premises, for the wages paid to employees, and for the premiums paid for fire insurance." (citations omitted)
(ii) The home page of Columbia Journal of Tax Law explains: "The Columbia Journal of Tax Law provides a needed forum for academics, practitioners, and policymakers to explore ideas in tax law and policy. The Journal aims to bridge the worlds of both theory and practice. Our commentary section, Tax Matters, features current perspectives from tax practitioners."
The section of Tax Matters in the Journal appears only occasionally -- not in every publication.
(iii) Section 280E of the Internal Revenue Code was codified as 26 USC § 280E, whose text can be retrieved by entering title number (26) and section number (280E) in
http://uscode.house.gov/search/criteria.shtml
Underneath the text, the content within a pair of parentheses shows legislative history: The "1982" indicated the year Congress enacted the law. Only one item in the content indicates the law has not been revised since.
(iii) "For that reason [federal laws against Cannabis], companies [growing or selling cannabis] cannot ship materials across the state lines."
Commerce Clause
https://en.wikipedia.org/wiki/Commerce_Clause
empowers Congress to regulate interstate or foreign commerce. "Across the state lines" definitely triggers the clause, thus ushering in Department of Justice. However, as prosecution of accused murder of Ms Zhang Yingying demonstrated, a perpetrator need not cross state lines to engage in instate commerce -- but then federal prosecutors will have the burden in a federal court to prove beyond a reasonable doubt that the perpetrator does.
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发表于 1-30-2018 16:43:46
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