Bill Summary
The "No Deductions for Marijuana Businesses Act" is a proposed amendment to the Internal Revenue Code of 1986, specifically targeting tax deductions and credits for businesses involved in marijuana trafficking. The legislation seeks to maintain the existing prohibition under Section 280E, which disallows deductions or credits for any trade or business that engages in the illegal sale of drugs, including marijuana, as defined by federal law.
Key points of the bill include:
1. **Short Title**: It is referred to as the "No Deductions for Marijuana Businesses Act."
2. **Amendment of Section 280E**: The bill explicitly states that no deductions or credits will be permitted for any expenditures related to the sale of marijuana or other controlled substances, consistent with federal law.
3. **Effective Date**: The provisions of this act would apply to expenses incurred after the bill is enacted, affecting taxable years that end after this date.
The purpose of this legislation is to reinforce federal regulations concerning marijuana businesses, despite varying state laws that may permit such activities.
Possible Impacts
The "No Deductions for Marijuana Businesses Act" could affect people in several ways:
1. **Financial Impact on Marijuana Businesses**: Businesses involved in the legal sale of marijuana would be unable to deduct expenses related to their operations from their taxable income. This could lead to significantly higher tax burdens for these businesses, potentially impacting their profitability and sustainability. As a result, some businesses may struggle to remain operational, leading to job losses and reduced economic activity in communities where these businesses are located.
2. **Consumer Prices**: With increased tax burdens due to the inability to deduct expenses, marijuana businesses may pass on the additional costs to consumers in the form of higher prices for their products. This could make legal marijuana less accessible to consumers, potentially pushing some individuals back to the illegal market where prices may be lower, but products are unregulated and unsafe.
3. **Investment and Growth in the Industry**: The inability to take deductions could deter investors from putting money into marijuana businesses, as the financial outlook may appear riskier and less profitable. This could stifle growth in the cannabis industry, preventing the development of new products, technologies, and innovations that could benefit consumers and the economy at large. Additionally, this lack of growth could limit opportunities for entrepreneurship in a market that is otherwise expanding in various states.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 471 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 471
To amend the Internal Revenue Code of 1986 to maintain the prohibition
on allowing any deduction or credit associated with a trade or business
involved in trafficking marijuana.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 6 (legislative day, February 5), 2025
Mr. Lankford (for himself and Mr. Ricketts) introduced the following
bill; which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to maintain the prohibition
on allowing any deduction or credit associated with a trade or business
involved in trafficking marijuana.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``No Deductions for Marijuana
Businesses Act''.
SEC. 2. EXPENDITURES IN CONNECTION WITH THE SALE OF MARIJUANA.
(a) In General.--Section 280E of the Internal Revenue Code of 1986
is amended to read as follows:
``SEC. 280E. EXPENDITURES IN CONNECTION WITH THE ILLEGAL SALE OF DRUGS.
``No deduction or credit shall be allowed for any amount paid or
incurred during the taxable year in carrying on any trade or business
if such trade or business (or the activities which comprise such trade
or business) consists of trafficking in--
``(1) marijuana (as defined in section 102(16) of the
Controlled Substances Act (21 U.S.C. 802(16))), or
``(2) controlled substances (within the meaning of schedule
I and II of the Controlled Substances Act),
which is prohibited by Federal law or the law of any State in which
such trade or business is conducted.''.
(b) Effective Date.--The amendment made by this section shall apply
to amounts paid or incurred after the date of the enactment of this Act
in taxable years ending after such date.
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