Harborside v. Commissioner: Ninth Circuit Affirms §280E Constitutionality — Appeal Denied

## Overview The Ninth Circuit Court of Appeals affirmed the United States Tax Court's 2020 decision in *Harborside Health Center v. Commissioner* (T.C. Memo 2020-51), upholding §280E disallowance on approximately $30 million in business deductions claimed by one of California's most prominent cannabis dispensaries across multiple tax years. ## Key Holdings The Ninth Circuit rejected Harborside's arguments that §280E: (1) violates the Eighth Amendment as an excessive fine, (2) constitutes an improper penalty that should be subject to heightened procedural protections, and (3) is inapplicable to state-licensed operators who comply fully with state law. ## Supreme Court Petition Harborside filed a certiorari petition with the U.S. Supreme Court. The petition argues that the circuit courts are applying §280E inconsistently and that the fundamental constitutional questions raised by applying a 1982 anti-drug-dealer provision to licensed, regulated businesses deserve Supreme Court review. ## Significance The Supreme Court's decision whether to grant certiorari — expected within 90 days of the petition filing — is the most significant pending development in cannabis tax law. A grant of certiorari would put §280E before the Supreme Court for the first time, with unpredictable results.