‘Reckless’ 280E Gamble Backfires As Feds Demand Millions From Cannabis MSO

Key points:

• The U.S. Justice Department is seeking $8.3 million plus interest from cannabis multistate operator TerrAscend USA for an “erroneous” refund it received after filing an amended tax return.
• That tax return contained deductions not allowed under Internal Revenue Service Code Section 280E, government attorneys said in a May 18 federal court filing.
• Tax experts warned the situation may signal the government’s position on the collective $1.6 billion in 280E tax debt owed by publicly traded cannabis companies as of earlier this year.
• And federal marijuana rescheduling, which reclassified medical cannabis as a Schedule 3 drug in April, may be no defense.

In an ominous sign for the cannabis operators deep in arrears with the federal taxman, the U.S. Internal Revenue Service wants TerrAscend USA to return an “erroneous” refund the New Jersey-based cannabis multistate operator received after wrongly claiming deductions not allowed under Internal Revenue Code Section 280E.

Filed Monday, a few weeks after the Justice Department reclassified medical cannabis as a Schedule 3 drug, the case may shed light on the government’s position on other outstanding tax cases, tax experts interviewed for this story said.

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