Episode 66

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Published on:

25th May 2023

Tax and Legal Challenges in the Cannabis Industry with Nick Richards: Part 2

Tax and Legal Challenges in the Cannabis Industry with Nick Richards: Part 2

In this episode, Meredith and Judy continue their conversation with Nick Richards, partner and co-chair of the cannabis law group at Greenspoon Marder LLP. They explore the differences between the psilocybin and cannabis industries, specifically focusing on the challenges they face with federal regulations, taxes, and audits. Nick talks about the implications of the federal tax code 280E. He also discusses the economic benefits of marijuana businesses to their local communities, the stigma and education that still need to be overcome for progress to be made, and the potentially life-changing palliative effects of psilocybin for those suffering from terminal illnesses.

Topics discussed in this episode:

  • Tax implications for the psilocybin industry 
  • Cannabis industry challenges and opportunities
  • The battle against stigma in the psilocybin and cannabis sectors


What You Will Learn:

01:00 The 280E “add-back”

08:37 Stigma and challenges surrounding the use of psilocybin for terminal illness

18:27 How tax professionals can help in the cannabis and psilocybin industries 




Quotables:

  • “The psilocybin industry doesn't want to be compared to the marijuana industry. The problem is that the federal government is going to see them the same and the roadmap that we have, the experience that we have, is from the cannabis industry.” -Nick Richards [00:25]


  • “When the cannabis industry got started, people didn't understand 280E. When 280E showed up, they sort of said that can't be right. Here is the reality of 280E in a very simple example. 280E applies to deductions but not to the cost of goods sold. If I buy a mushroom to sell and I pay $2 for that mushroom and then I pay my salesperson a $2 salary and they sell it for $5, I just made a dollar. But because of 280E, I am not going to be able to deduct the $2 I paid on my salesperson.”  -Nick Richards [02:37]


  • “Because of the way our system works, state tax returns start at line 35 of the federal tax return. So if you're in a company that is subject to 280E, you're going to pay that tax again at the state level because it takes off from line whatever of the local level.” -Judy Vorndran [04:45]


  • “I don't think it is fair to treat a legitimate business like it's not a legitimate business. It's kind of what you're saying Indirectly by disallowing expenses and otherwise, and then regulating and retransferring things that are muddled.” -Nick Richards [10:20]


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Production Support

This episode was produced with support from Truth Work Media. www.truthworkmedia.com

Mentioned in this episode:

Advanced Sales and Use Tax Workshop

Take your sales tax to the next level at Advanced Sales and Use Tax Workshop, February 19-21 in Nashville. Diane Yetter and the Sales Tax Institute’s industry-leading faculty provide individualized training, valuable resources, and practical solutions. Expand your network and earn 23 CPE credits. Visit the link in the show notes and use the code SALTOV10 for 10% off. Save your spot now!" https://keap.page/xp141/saltovation-podcast.htm

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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.