When the U.S. Supreme Court’s declined to consider a Colorado Supreme Court ruling on a tax fine it could have had a positive impact on the Eighth Amendment arguments around 280E rules. That coupled with dissenting opinions in a recent case involving a California medical marijuana company might be the wedge the cannabis industry is needing.
The decision that a Colorado Department of Labor levy against Dami Hospitality was an excessive fine or penalty under the Eighth Amendment to the U.S. Constitution which disallows excessive penalties and fees – a case the cannabis industry has been trying to make for years.
The two rulings together appear to have somewhat weakened 280E, which potentially is good news for the cannabis industry. Here’s why:
- By not hearing the Colorado case, the U.S. Supreme Court decision could open the door to challenges to 280E. If such challenges are eventually successful, it would be a boon to the marijuana industry since that IRS provision states a business involved in the trafficking of a federally controlled substance, such as cannabis, cannot take tax deductions or credits even though it must pay taxes on income.
- The dissenting opinions in the California case further cast doubt about 280E, with one judge contending it is unconstitutional under the Eighth Amendment.
Click here for more detail on the cases.