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02/25/2020 08:44 AM
Pennsylvania State Senate
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=S&SPick=20190&cosponId=30153
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Senate of Pennsylvania
Session of 2019 - 2020 Regular Session

MEMORANDUM

Posted: August 22, 2019 03:01 PM
From: Senator Daylin Leach
To: All Senate members
Subject: Normal Business Deductions for Medical Cannabis Businesses
 
Soon I will introduce legislation to decouple Section 280(e) of the Internal Revenue Code from Pennsylvania state tax law for medical cannabis businesses.

Section 280(e) was enacted by Congress in 1982 in response to a drug dealer who successfully claimed federal tax deductions for his business in 1981. Congress responded by enacting Section 280(e) of the Internal Revenue Code, which, among other things, prohibits a business from claiming any deduction or credit for any amount paid or incurred in carrying on the business if it consists of trafficking in controlled substances prohibited by Federal law or the law of any State in which the business is conducted.

Due to the legal coupling of certain PA tax laws to the Internal Revenue Code, 280(e) prevents our state’s medical cannabis businesses from deducting many of the normal costs of doing business that any other business gets to deduct, like rent, staff wages, security, and marketing. This is extremely unfair and burdensome, and in some cases, it literally forces the closure of new businesses trying to get their footing.

Wherever you may have stood during the original debate on legalizing medical cannabis, I think we all want the businesses which are easing the suffering of so many people and creating so many jobs in our districts to have a chance to succeed. Though we in Harrisburg obviously can’t do much about 280(e) on the federal level, we can do what a number of other states have already done: decouple PA’s deduction policy from 280(e)

Please join me in supporting this important legislation.

If you have questions about this legislation, please don’t hesitate to contact me.



Introduced as SB907