This article referenced in this post was originally published in Volume 99, Issue 11, of CCH’s Taxes—The Tax Magazine (November 2021).
In the November 2021 edition of International Tax Watch in TAXES – The Tax Magazine, Tom Firestone, Scott Frewing, Ethan Kroll, Erika Van Horne, Stewart Lipeles, and Julia Skubis Weber explore the U.S. international tax implications of section 280E, concluding that section 280E should not disallow deductions for expenses U.S. persons incur in connection with:
- maintaining cannabis IP in, and licensing that IP from, the United States;
- engaging in cannabis R&D in the United States; and
- assisting with and overseeing from the United States non-U.S. operations that manufacture, market, distribute, dispense, and sell cannabis products outside the United States, where it is legal to do so.
They also determine that section 280E should not disallow deductions against tested or subpart F income for expenses CFCs incur in connection with manufacturing, marketing, distributing, dispensing, and selling cannabis products outside the United States, where it is legal to do so. In short, the authors conclude that section 280E should not deter foreign multinationals that seek to commercialize cannabis legally from establishing robust operations in the United States, where there is a wealth of talent in the cannabis space.
Read their full analysis of the issue in Who’s Afraid of Code Sec. 280E?, International Tax Watch (Nov. 2021).