Episode 65

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Published on:

12th May 2023

Tax and Legal Challenges in the Cannabis Industry with Nick Richards

In this episode, Meredith and Judy speak with Nick Richards, an expert in taxation for the cannabis industry, and partner and co-chair of the cannabis law group at Greenspoon Marder LLP. Nick shares his journey from working in the IRS to becoming an expert in cannabis taxation. He also discusses how he navigates the ever-changing landscape of taxation for cannabis businesses. Together, they discuss the high taxes and legal challenges that cannabis businesses face. They also explore the recent changes in the classification of Delta Eight and Delta Nine and psilocybin, and how they impact the industry.

 

Topics discussed in this episode:

  • Nick's Journey to the Cannabis and Psilocybin Industries
  • Regulatory Changes in Colorado for Psilocybin and Cannabis
  • Mycelium and the Cannabis Industry

What You Will Learn:

04:34 Tax Ops' Proactive Approach to Cannabis and CBD Companies

06:11 Tax Implications of Hemp and Psilocybin in the Cannabis Industry

13:48 Understanding the Language of the Psilocybin Space

15:14 The Benefits of Psilocybin and Mushrooms



Quotables:

  • “There are not robust regulations around the marijuana industry. So this year what we're seeing in that space is that a lot of those CBD manufacturers went ahead and were doing something called Delta Eight and Delta Nine, which is THC derived from hemp. Now many states are going back in and saying they think you're a marijuana company. Guess what tax applies to all of your sales for the past four years? The marijuana tax.” -Nick Richards [05:16]


  • “There's just so many things I think that are still wrong about how we're handling this legal industry. And now we're, like, going after it more for classification issues when there's no alternative substance in a THC, going back to penalties.” -Judy Vorndran [06:31]


  • “The rules are still being written in the mushroom space. It looks to us like it's sort of less retail and more medical, which is good for the industry if that allows them to be profitable. Because it starts to align with a case out there in the marijuana space called Champ rather than subsequent cases that found that all the activities of a cannabis-related enterprise were subject to a code section called 280 E rather than just the specific area where the sale of marijuana was occurring.”  -Nick Richards [09:20]


  • “The problem with a lot of the cannabis cases was that they put so many expenses on the other non-280 E company that it could never make a profit. So it was found to be not a legitimate company and merely just part of the cannabis company. And again, that's because they're so limited, the only other thing they can sell are bongs and T-shirts. -Nick Richards [13:24]


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Mentioned in this episode:

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About the Podcast

SALTovation: Making Sense of State and Local Tax
Welcome to SALTovation. The SALTovation show is a podcast series featuring the leading voices in state and local tax (SALT). Here we talk about issues, strategies, and planning tools to help you make sense of SALT. Because, in SALT, there is no “one and done.” SALT is a puzzle of ever-changing pieces. Solving that puzzle is our business at SALTovation. Tens of thousands of listeners know they won't get tax talk as usual with the SALTovation team. Our team is known for straight-talk with a flair for fun, providing clarity and opinions that move businesses forward with confidence.

Attorney, CPA, speaker, and writer Judy Vorndran leads the SALTovation team as they go inside business to help deal with the daily operations and long-term strategies of making SALT less “taxing.” Judy has spent more than 25 years advocating for businesses with innovative strategies, renowned knowledge and experience. She has helped guide thousands of taxpayers across the nation and globally through the morass of SALT, freeing them to concentrate on growth. Joining Judy are the wickedly smart members of the SALTovation team, who have seen, worked with and tamed some of the most prickly issues in SALT. They enjoy sharing their stories and knowledge with listeners.

Solving the SALT puzzle doesn’t happen in a vacuum; it takes a community. So, we invite leaders in business and state and local tax to share their stories, challenges and successes on this show. Drop us a line at SALTovation.com if you'd like to join the conversation and tune into our regular series at TaxOps.com.