During these unpredictable times, there is certainty in taxes. This month the Internal Revenue Service (“IRS”) posted a dedicated marijuana-industry specific webpage providing general tax guidance and FAQs for the predominantly cash-based industry. The guidance does not signify a change to the existing law but rather reminds marijuana business owners of their responsibility to pay federal taxes.
This IRS guidance is on the heels of a report from earlier this year by the Treasurer Inspector General for Tax Administration (“TIGTA”), aptly titled “The Growth of the Marijuana Industry Warrants Tax Compliance Efforts and Additional Guidance.” In the report, TIGTA recommended that the IRS develop educational guidance to assist marijuana businesses in understanding their tax obligations.
In the recent tax guidance, the IRS confirms that marijuana businesses are subject to the limitations of Section 280E of the Internal Revenue Code. Section 280E explicitly disallows tax deductions or credits for businesses that traffic a Schedule 1 or controlled substance. Although marijuana may be state-legal, on the federal level it is still considered a controlled substance classified as a Schedule 1. Section 280E greatly impacts the profitability of marijuana businesses, because they are not able to make the same tax deductions or … Keep reading
Marijuana-related businesses (“MRBs”) planning to raise money in private offerings should be aware of recent changes to the “accredited investor” definition under the Securities Act of 1933, as amended (“Securities Act”). The U.S. Securities and Exchange Commission (“SEC”) recently adopted a final rule (the “Final Rule”) amending Rule 501(a) of Regulation D promulgated under the Securities Act, which expands the definition of “accredited investor.”
Topline conclusion: These changes establish additional investor eligibility qualifications, thereby increasing the available pool of potential investors who may participate in private securities offerings. This is good news for MRBs hoping to raise money, particularly under Rule 506(b) or Rule 506(c).
When will these changes become effective? The Final Rule will become effective sixty (60) days following its publication in the Federal Register. It is anticipated that the effective date will be sometime in early November 2020.
Will the Final Rule change the income and net worth standards required for individuals? No. The income and net worth thresholds for individuals remain the same. That is, individuals must still have an annual income of at least $200,000 (or $300,000, together with his/her spouse) or a net worth of more than $1 million (excluding the … Keep reading
Burns & Levinson attorneys Scott Moskol and Katrina Skinner join Steven Kemmerling, Founder & CEO of CRB Monitor, for a discussion on industry trends and insights into corporate intelligence for cannabis banking compliance.
After having been indefinitely postponed in April 2020 due to the COVID-19 pandemic and nearly four years after Maine residents voted to legalize adult-use recreational cannabis, Maine is set to launch the long-awaited retail sale of adult-use recreational cannabis this coming October. While voters passed a ballot measure in 2016 to legalize adult-use recreational cannabis, state legislators and regulators have spent the time in between battling how to regulate the industry. And, as the state only started accepting applications to its adult-use recreational cannabis program back in December 2019, some had hoped that recreational sales would begin in April prior to the state announcing the indefinite postponement, which was then suggested would last beyond June.
Four months later, on August 14th, 2020, Maine’s Office of Marijuana Policy finally announced its plans for the issuance of the state’s first adult-use marijuana establishment licenses beginning on September 8th, which is anticipated to give stores enough time to harvest, test and package products for sales to begin a month later on October 9th. In light of the ongoing pandemic, the Office of Marijuana Policy is also working with the state’s Department of Economic and Community Development … Keep reading
Since the era of cannabis legalization commenced, stakeholders, regulators, and ordinary citizens alike have been concerned about the lack of social equity and diversity in the cannabis industry. Even prior to the modern era of legalization, the inextricable relationship between race, enforcement, and the origins of prohibition has served as a troubling reminder of our country’s systemic inequity, as we have previously noted. Therefore, in recent years regulators have attempted to address past social and racial disparities by ensuring that those from disproportionately impacted communities would not be blockaded from the legal market. This week we will take a look at various approaches that state regulators have implemented to combat inequity in the industry.
While several states have made social equity provisions a part of their marijuana programs, jurisdictions have taken slightly different approaches and experienced myriad results. Since 2016, at least six (6) states have enacted considerable measures to increase diversity in their respective marijuana programs by either eliminating or mitigating barriers to entry into the market (including, Massachusetts, California, Michigan, Ohio, Illinois, Washington). Moreover, with respect to adult-use marijuana, Massachusetts, California, and Illinois have each made social equity a key aspect of their legalization plans.
Massachusetts … Keep reading
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