A Path Forward

As most of you know, a significant development has emerged with the recent success of Trulieve, a large cannabis Multi-State Operator, amending its tax returns and securing a $113 million dollar refund.

This event indicates there is a potential pathway for the rest of the cannabis industry to secure refunds by recapturing lost deductions due to 280E.

Unfortunately, Trulieve considers its tax position intellectual property and will not disclose its methodology.

However, through our independent research and collaboration with other cannabis industry professionals, I believe we understand Trulieve’s position and can extend a similar opportunity to the rest of the cannabis industry.

Legal Landscape and Opportunities

The foundation of our argument is based on a nuanced understanding of the evolving legal landscape, highlighted by significant cases and federal actions that suggest a potential reevaluation of cannabis’s legal standing.

Probably the most notable of these is the Supreme Court case Gonzales v. Raish decision in 2005.

In this case, Raish argued that the federal government is violating the interstate commerce clause of the constitution, and it should not enforce its regulations on cannabis in states with medical programs, considering medical marijuana is currently an entirely intra-state commerce issue.

Unfortunately, at that time, the Supreme Court upheld its broad and more liberal interpretation of the commerce clause, reiterating the Court’s position that the federal government has the right to govern intra-state considerations if the issue, such as drug enforcement, has broader national implications.

However, now that there are six conservative Supreme Court Justices, support for federal authority over cannabis under the Commerce Clause is being faced with increased scrutiny.

Most notably, with the widespread adoption of medical and recreational marijuana programs by most states, Justice Clarence Thomas acknowledged that the factual basis underpinning the Raish decision has dramatically shifted.

This shift challenges the uniform illegality that once supported the federal government’s stance.

Furthermore, recent court decisions, including the Dobbs vs. Jackson case, in which the Supreme Court overruled Roe v. Wade

This judicial trend, coupled with other legislative actions like the Rohrabacher-Farr Amendment (also known as the Rohrabacher–Blumenauer amendment) and shifting federal approaches to cannabis regulation, including the Cole memo and the Health and Human Services’ recommendation to reschedule cannabis, underscores a growing momentum toward recognizing state sovereignty over cannabis regulation.

The Future of Cannabis Regulation

At this point, it is not just a matter of if, but when marijuana will be removed from the Controlled Substances Act and, therefore, not subject to 280E.

Unfortunately, the final decision may take years before the Federal government gives cannabis businesses the go-ahead to amend their tax returns to recapture lost deductions.

By that time, the statutes of limitations for amending tax returns for a refund will have run out.

Action Required for Cannabis Operators

“Operators in the cannabis space must act now to secure their ability to recapture lost deductions by filing a Protective Claim for Refund.”

The Protective Claim for Refund keeps the statute of limitation for filing for a refund open beyond the three years automatically granted to all taxpayers.

Once again, by filing a protective claim for a refund, businesses can safeguard their opportunity to claim possible tax refunds amidst these current uncertainties.

How Calyx CPA Can Assist

At Calyx CPA, we specialize in navigating these complexities. We advocate for our clients to ensure they are positioned to benefit from potential legal shifts like these.

Again, I encourage you to reach out today to secure your ability to file for a refund.

Until then, we at Calyx CPA have developed a solution to mitigate the impact of 280E to levels near if it were to have been a legal business. We will continue to save our clients’ money until this injustice of 280E is rectified.

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