Draft Bipartisan Senate Bill Includes 280E Fix — Fails to Provide Complete Protection for States

by Lane Powell PC
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Last week, Tom Angell from the Marijuana Movement reported on bipartisan U.S. Senate legislation. He noted the legislation would end the federal war on cannabis to exempt cannabis-related activities under federal law. We obtained a draft of this legislation and there are several noteworthy items.

280E Fix

The draft bill notes that conduct in compliance with the bill does not constitute trafficking a controlled substance under the Controlled Substances Act and more importantly any other provision of law. One well-known provision of law that relies on trafficking of controlled substances is section 280E of the Internal Revenue Code. Section 280E denies deductions to any taxpayer trafficking in a Schedule I or Schedule II controlled substance. Therefore, most participants in state or tribal cannabis programs will no longer be subject to section 280E if this bill passes in its current form.

Lack of Clarity 

The mechanics of the draft bill are interesting. The draft provides that the provisions of the Controlled Substances Act related to “marihuana” do not apply to any person acting in compliance with state or tribal laws with some exceptions. The current definition of marihuana is as follows:

The term “marihuana” means all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin. Such term does not include the mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds of such plant, any other compound, manufacture, salt, derivative, mixture, or preparation of such mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of such plant which is incapable of germination.

However, the Controlled Substances Act includes “marihuana” and other cannabis related items in its list of Schedule I controlled substances. Schedule I controlled substances includes “marihuana,” “tetrahydrocannabinols” — the primary psychoactive substance in cannabis — and “cannabimimetic agents.”  The drafters should update the bill to clarify that, in addition to marihuana, the Controlled Substances Act’s provisions related to tetrahydrocannabinols and cannabimimetic agents do not apply to any person acting in compliance with state or tribal laws.  Otherwise, the bill may not accomplish what the drafters intended.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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