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Marijuana Companies Are Blocked From COVID-Era Employee Retention Tax Credits Under 280E Penalty, Federal Court Says

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1 day agoon

In yet another wrinkle stemming from the ongoing federal prohibition on marijuana, a U.S. district court has ruled that an Internal Revenue Service (IRS) tax rule prevents state-legal cannabis companies from being eligible for refunds of employee retention credits (ERCs), which helped businesses continue to pay workers during early COVID-era shutdowns.
In the decision, the U.S. District Court for the Western District of Washington ruled that “nothing in the plain text of [IRS code] Section 280E limits its application to income tax credits,” rejecting arguments from plaintiffs.
The government, meanwhile, contended that the Section 280E prohibits any and all tax credits, including refunds of the COVID-era ERCs, which are typically refundable for other businesses.
On May 9, the court granted the government’s motion to dismiss the the case, Solstice Holdings v. U.S.
Section 280E disallows standard tax deductions and tax credits for businesses that traffic in Schedule I or II substances. It applies even in cases where businesses are operating in compliance with state law.
The law firm Holland & Hart said in a post about the new ruling that it appears to be “the first case where a court has addressed the application of IRC § 280E to ERC.”
Another law firm, GreenspoonMarder, noted in post about the district court opinion that many cannabis businesses applied for the ERC during the pandemic—and many received it.
“Some were deemed ‘essential’ and had to stay open during the pandemic despite the higher costs associated with continued operations during the pandemic and various restrictions that rendered it much more difficult to visit their stores,” attorneys Nick Richards and Sabrina Strand wrote recently.
“When the ERC first came out, there was a question as to whether it was available to cannabis companies because it creates a tax credit that Section 280E may disallow,” the post points out. “There was also an argument that it didn’t apply to the ERC, because Section 280E is part of Section A of the [Internal Revenue Code], which concerns income rather than employment taxes. At least one court now disagrees.”
Both law firms suggest the case out of Washington State creates a standard across all states within the jurisdiction of the U.S. Court of Appeals for the Ninth Circuit. GreenspoonMarder, for example, says the ruling “technically only applies to companies located in the 9th Circuit.”
“That said, as the only opinion on this subject,” lawyers wrote, “the IRS may look to it as authority regardless of whether taxpayers are in one of the nine states located in the Circuit.”
Notably, as a district court case and not a published appellate opinion, the ruling has limited impact outside the immediate dispute and is not binding on other courts. That said, it’s the one indicator so far of how courts might rule in similarly situated cases.
Separately, late last year IRS warned the marijuana industry that some cannabis companies had, without a “reasonable basis,” filled out a supplementary form in an attempt to take federal tax deductions that they’re prohibited from receiving under 280E.
In that notice, IRS said certain firms were attempting to circumvent the federal ban by completing the disclosure statement Form 8275. That form is “used by taxpayers and tax return preparers to disclose items or positions, except those taken contrary to a regulation, that are not otherwise correctly disclosed on a tax return in order to avoid certain penalties,” the agency said.
State-licensed cannabis businesses could be able to start taking broader federal tax deductions if the push to move marijuana to Schedule III is ultimately successful. But IRS separately advised last June that just because that possibility is on the horizon doesn’t mean the industry can start claiming deductions in the interim.
Multiple states have taken steps to provide state-level tax relief to marijuana businesses that are subject to the IRS 280E statute, but the federal rule has not yet changed. And it’s unclear when the proposed federal marijuana rescheduling rule might take effect. An administrative hearing process concerning the rule is currently underway.
In 2023, then-Rep. Earl Blumenauer (D-OR) reintroduced a congressional bill that would amend the IRS code to allow state-legal marijuana businesses to finally take federal tax deductions that are available to companies in other industries.
The latest notices come three years after the Congressional Research Service (CRS) noted in a 2021 report that the agency “has offered little tax guidance about the application of Section 280E.”
IRS did provide some guidance in an update in 2020, explaining that while cannabis businesses can’t take standard deductions, 280E does not “prohibit a participant in the marijuana industry from reducing its gross receipts by its properly calculated cost of goods sold to determine its gross income.”
The IRS update seemed to be responsive to a Treasury Department internal watchdog report that was released in 2020. The department’s inspector general for tax administration had criticized IRS for failing to adequately advise taxpayers in the marijuana industry about compliance with federal tax laws. And it directed the agency to “develop and publicize guidance specific to the marijuana industry.”
Read the court’s ruling below:
Do Cannabis Companies Really Have To Wait for Rescheduling To Escape The 280E Tax Penalty? (Op-Ed)

Author: mscannabiz.com
MScannaBIZ for all you Mississippi Cannabis News and Information.
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Louisiana Senate Votes To Create Psychedelics Task Force Focused On Benefits For Military Veterans

Published
33 minutes agoon
June 12, 2025
The Louisiana Senate has passed a Republican-led resolution calling for the establishment of a task force to study and make recommendations on the potential therapeutic benefits of psychedelics for military veterans.
Sen. Patrick McMath (R) filed the legislation on Tuesday, proposing the creation of the Task Force on Alternative Therapies for Veterans, and the Senate unanimously adopted it on Wednesday.
The measure calls for a nine-member panel to “study whether certain psychedelic therapies may be beneficial to Louisiana veterans, and to propose recommendations, together with specific proposals for legislation, by written report to the legislature.”
The task force would be comprised of the chair of the Senate Committee on Health and Welfare, the governor or designee, the secretaries of the state Department of Health and Department of Veterans Affairs or designees, the chancellors of two schools within Louisiana State University or designees, the president of the Louisiana Hospital Association or a designee, a physician and veteran.
“For our military veterans, many of the deepest wounds of war are invisible,” the whereas section of the resolution says, and “our veterans deserve every opportunity to try therapies that alleviate the functional and neuropsychiatric symptoms of traumatic brain injury.”
It says that there are “some psychedelic therapies which may be beneficial to treating mental health,” citing psilocybin, MDMA, ibogaine and ketamine as examples.
The task force would be required to study clinical trials on psychedelics for certain mental health conditions, current scientific literature on the issue, actions by the federal Food and Drug Administration (FDA) related to this research, treatment guidelines for psychedelic therapy and patient access considerations, including “availability, affordability, accessibility, training and licensure, and other regulatory requirements”
McMath said on the Senate floor on Wednesday that “all we’re doing here is we’re creating a task force on alternative therapies for veterans.”
“This is something that’s been taking place in a number of other states, and we’re going to study this over the next 12 months,” he said.
The resolution says “the task force shall terminate on the date of the submission of its report or February 1, 2026.”
As a Senate resolution, the measure does not need to be approved by the House of Representatives or the governor to be enacted.
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Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.
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Meanwhile, a Louisiana bill that would have established a tax system to prepare the eventual legalization of adult-use marijuana had an initial committee hearing last month where members narrowly rejected the plan.
HB 636 was intended to work in tandem with a separate bill from Rep. Candace Newell (D), HB 627, which would create a three-year pilot program that is “designed to test and evaluate parameters of the implementation of a permanent adult-use cannabis program,” according to a legislative analysis.
The bill filings come nearly a year after the Republican governor of Louisiana signed bills to decriminalize marijuana paraphernalia and enact restrictions on the hemp market.
That came on the same day that Gov. Jeff Landry (R) vetoed a measure that would have allowed him and future governors to issue pardons for people with past cannabis convictions, he gave final approval to the paraphernalia decriminalization proposal from Rep. Delisha Boyd (D).
As it stands in Louisiana, possession of up to 14 grams (or half an ounce) of marijuana is decriminalized, punishable by a $100 fine without the threat of jail time.
In 2022, former Gov. John Bel Edwards (D) also signed into law a measure that was designed to streamline expungements for people with first-time marijuana possession convictions.
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Photo elements courtesy of carlosemmaskype and Apollo.

Author: mscannabiz.com
MScannaBIZ for all you Mississippi Cannabis News and Information.
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North Carolina Governor Says Marijuana Legalization Can Address Public Health Risks In Unregulated Intoxicating Hemp Market

Published
2 hours agoon
June 12, 2025
The governor of North Carolina is reiterating his support for legalizing marijuana, stressing the need to create a regulated cannabis program to mitigate the risks associated with products in the intoxicating hemp market.
“Today, all across North Carolina, there are unregulated THC products that are intoxicating available for purchase,” Gov. Josh Stein (D) said in a video posted on X on Wednesday, referencing consumable hemp products sold at retailers with little oversight or quality control standards.
“All you have to do is just walk into any vape shop and you’ll see there is no legal minimum age to purchase these products, which means that kids are able to and are buying them without any enforceable labeling requirements,” he said. “Adults are using them recreationally without having any idea what’s in them or how much THC there is.”
“Our state’s unregulated cannabis market is the Wild West, and it is crying out for order,” the governor said, adding that’s the reason he signed an executive order last week creating a bipartisan commission to study cannabis legalization in hopes of moving the GOP-controlled legislature to act on reform.
“This group will be tasked with recommending a comprehensive approach to regulate cannabis sales here in North Carolina,” he said. “They will study best practices and learn from other states to develop a system that protects our youth, allows adult sales, ensures public safety, promotes public health, supports North Carolina agriculture, expunges past convictions of simple THC possession and invests the revenues and resources for addiction, mental health and drugged-driving detection.”
The newly formed Advisory Council on Cannabis will be tasked with making recommendations to protect young people from intoxicating THC products while legalizing adult use in North Carolina.
Let’s get this right. pic.twitter.com/rssf2uHbta
— Governor Josh Stein (@NC_Governor) June 11, 2025
“I know we can get this right. Let’s create a safe, legal market for adults that protects North Carolina’s children,” Stein said.
The North Carolina Advisory Council on Cannabis that the governor convened will be comprised of up to 30 members, including lawmakers, law enforcement officials, agriculture industry stakeholders, health experts, tribal representatives, advocates and others to explore possible regulatory models for adult-use marijuana and hemp.
The order says there’s a need for reform because the “current lack of regulation, including age, potency, and purity limitations, poses a threat to all North Carolinians, particularly our youth.” And “rather than allowing this unsafe and unregulated market to continue, smart and balanced regulation presents an opportunity not only to protect the health and well-being of our people, but also to generate revenue that can benefit our state.”
The panel will be required to hold its first meeting in July and then convene at least every other month through December 2026. Members will be tasked with developing and submitting initial recommendations on a “comprehensive cannabis policy, including any proposed legislation” to the governor by May 15, 2026. Final recommendations will be due by December 31, 2026.
Rather than sticking to the status quo, the governor has emphasized that the state should move to legalize marijuana for adults 21 and older. That would represent a significant policy change for North Carolina, which is one of the rare remaining examples of a state without a comprehensive medical cannabis program.
During his time as the state’s attorney general, Stein led a separate task force under then-Gov. Roy Cooper (D) that examined racial injustice issues and ultimately recommended decriminalizing marijuana and studying broader legalization in response to racially disparate enforcement trends.
In recent sessions, multiple limited medical marijuana legalization bills advanced through the Senate, only to stall out in the House.
But Stein is making the case that moving forward on comprehensive recreational reform would help avoid issues that other states have experienced transitioning from medical to adult-use marijuana markets.
That position might put one of the advisory council’s appointed members, Sen. Bill Rabon (R), in an awkward place, as the senator has long championed bipartisan medical marijuana legalization legislation and insisted it should not be viewed as a step toward adult-use legalization.
Meanwhile, in the House, Rep. Aisha Dew (D) filed a bill in April that would legalize medical marijuana for patients with a variety of specified conditions, including cancer, epilepsy, HIV/AIDS, Parkinson’s disease, PTSD, end-of-life care and other serious ailments.
The North Carolina Compassionate Care Act is considerably more detailed than a separate Democrat-led medical cannabis bill introduced earlier that month that would allow access only for patients enrolled in a “registered research study.”
Advocates had been awaiting House introduction of a comprehensive bill, especially since Senate President Phil Berger (R) said his chamber is deferring to the House to move first on medical marijuana reform this session.
Two other measures introduced so far this session would legalize cannabis in North Carolina. In the Senate, S350 would create medical and adult-use marijuana systems, while H413 in the House would legalize only recreational marijuana.
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Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.
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House Speaker Destin Hall (R) said in early March that Republicans in his chamber could be willing to consider medical marijuana legalization this session. But he didn’t indicate any forthcoming House bills, instead suggesting legislation would come from the Senate.
Voters, for their part, seem to be on board with cannabis reform. A poll published in February found that 71 percent of likely voters in North Carolina support legalizing medical marijuana in the state, with majorities across party lines and in every surveyed demographic—aside from people over the age of 80—in favor.
Former House Speaker Tim Moore (R) said last year that while he personally supports legalizing medical marijuana, there is an informal rule in the chamber that at least 37 GOP members must back any given bill in order to bring it to the floor.
The current House speaker, Hall, has in the past voiced opposition to medical cannabis reform.
Former House Majority Leader John Bell (R) said in 2023 that while there were “still discussions going on” about medical marijuana legislation, he was “very sure you won’t see that bill move” due to insufficient support among Republicans. He said that was “unfortunately” the case.
An Indian tribe in North Carolina launched the state’s first medical marijuana dispensary last April—despite the protests of certain Republican congressional lawmakers. More than a week after legal marijuana sales kicked off to all adults at The Great Smoky Cannabis Co. in Cherokee last year, thousands from across the region made purchases.
Photo courtesy of Philip Steffan.

Author: mscannabiz.com
MScannaBIZ for all you Mississippi Cannabis News and Information.
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Sports Fans Welcome Cannabis Brand Sponsorships For Teams In Professional Leagues Like NFL, NBA And MLB, Poll Shows

Published
3 hours agoon
June 12, 2025
A majority of sports fans across multiple leagues—from NFL to pro tennis and NBA to NASCAR—say it’s acceptable for cannabis companies to sponsor teams, according to a new survey.
As more professional sports leagues loosen policies around marijuana use among players, and some have allowed for cannabis-related sponsorships, the poll from Performance Research and Full Circle Research found either majority or plurality support for letting cannabis brands partner with teams.
There was more support for allowing CBD-related sponsorships, as opposed to deals with “THC brands,” but in no case was there majority opposition to either kind of partnership among fans of nine different sports leagues: NFL, NBA, MLB, MLS, UFC, NHL, Pro Tennis, Pro Golf and NASCAR.
Here’s the percentage of sports fans across those leagues who say it’s “completely” or “mostly” acceptable for CBD companies to sponsor teams:
- MLS: 73 percent
- UFC: 68 percent
- Pro Tennis: 64 percent
- NHL: 62 percent
- Pro Golf: 62 percent
- NBA: 60 percent
- NASCAR: 56 percent
- NFL: 55 percent
- MLB: 55 percent
Here’s the percentage of sports fans across those leagues who say it’s “completely” or “mostly” acceptable for THC companies to sponsor teams:
- MLS: 69 percent
- UFC: 60 percent
- NHL: 55 percent
- Pro Tennis: 53 percent
- NASCAR: 53 percent
- NBA: 50 percent
- Pro Golf: 49 percent
- NFL: 46 percent
- MLB: 46 percent
The survey included 1,o00 sports fans over the age of 21 in the 24 states where recreational marijuana is legal and was conducted between April 23-26.
“I think there’s no longer a justifiable reason to be shy about this,” Jed Pearsall, president and founder of Performance Research, told Sports Business Journal, which first reported the poll results.
The outlet reported that the survey also showed that a majority of sports fans’ perceptions of leagues and teams are either positively affected or unchanged due to cannabis sponsorships—though it also found that only 17 percent are aware of any such specific partnerships.
“I think those on the sales side can aggressively sell these opportunities and those on the sponsor side should realize that these opportunities will be welcome where they go,” Pearsall said. “Sports has a way of normalizing things, and that’s good for the cannabis industry, and those marketing with it.”
To that point, major sports leagues have been gradually reducing the stigma against cannabis use, with policy changes for players and professional affiliations with the industry.
For example, the NFL recently reached an agreement with its players union to further reform its marijuana policies, significantly reducing fines for positive tests while increasing the allowable THC threshold for players.
About four years after NFL ended the practice of suspending players over cannabis or other drugs as part of a collective bargaining agreement, the league has again revised its Substances of Abuse Policy and Performance Enhancing Substances Policy.
The National Collegiate Athletic Association (NCAA) last year voted to remove marijuana from its banned substances list for Division I players.
The reform builds on a 2022 change that increased the allowable THC threshold for college athletes, aligning NCAA’s rules with those of the World Anti-Doping Agency (WADA).
In October, Nevada regulators officially adopted a rule change that will protect athletes from being penalized for using or possessing marijuana in compliance with state law.
The head of the U.S. Anti-Doping Agency (USADA) blasted the “unfair” ban on marijuana for athletes competing in international sport events, including the Olympics that were underway in Paris at the time of the comments.
USADA CEO Travis Tygart said it was “disappointing” that WADA has maintained the cannabis prohibition based on what he considers a misguided justification.
WADA did carry out a review into its marijuana policy at the request of USADA and the White House Office of National Drug Control Policy (ONDCP) following the controversial suspension of U.S. runner Sha’Carri Richardson, who was barred from participating in the Olympics in 2021 after she tested positive for THC. Richardson said she used cannabis to cope with the recent passing of her mother.
While UFC announced in late 2023 that it was formally removing marijuana from its modified banned substances list for athletes, the league notified participants that the reform didn’t apply under California State Athletic Commission (CSAC) rules.
UFC advised fighters that they could be subject to a $100 fine by CSAS if they tested over 150 nanograms of THC per milliliter ahead of the UFC 298 event that took place in February.
At the beginning of 2024, the Brooklyn Nets and New York Liberty entered into partnerships with a CBD beverage company—the first teams in the NBA and WNBA, respectively, to forge deals with the cannabis industry.
The New York-based clubs are partnering with Mynd Drinks, a hemp-based CBD sparkling beverage company that also made history last year when it became an official partner of the Major League Baseball (MLB) team the Chicago Cubs.
Last year, NFL announced it was partnering with Canadian researchers on a clinical trial to test the safety and efficacy of CBD for pain management and neuroprotection from concussions—key issues for many football players who experience injuries as part of the game.
Separately, NFL and the Denver Broncos last year asked a federal court to reject a player’s lawsuit alleging discrimination over penalties he incurred due to positive THC tests from his prescribed use of a synthetic cannabinoid.
In a joint motion to dismiss filed with the U.S. District Court for the District of Colorado, the league and team defended their marijuana policy for players, affirming it’s their view that use of cannabis can lead to on-field injuries, poor job performance and “alienation of the fans.”
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