IRS Cannabis-Tax Compliance Hub

The U.S. Tax Court issued its opinion in *Patient's Mutual Assistance Collective Corp. v. Commissioner*, sustaining the IRS's disallowance of approximately $4.7 million in business deductions claimed by a California cannabis dispensary on its federal income tax returns for 2014–2…

IRS Private Letter Ruling 202418007 addresses whether an information technology company that provides point-of-sale software, inventory tracking systems, and compliance reporting tools exclusively to licensed cannabis dispensaries and cultivators is subject to §280E as a business…

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 prominen…

IRS Criminal Investigation (IRS-CI) and the Drug Enforcement Administration (DEA) have formalized a joint task force targeting cannabis operators who allegedly combine state-license cannabis trafficking with federal tax evasion. The task force focuses on operators who underreport…

An IRS field advisory memorandum instructs examination agents to disallow §168(k) bonus depreciation claimed by cannabis plant-touching entities. The advisory concludes that the bonus depreciation deduction — which allows businesses to immediately deduct 100% (now 60% under TCJA …

Chief Counsel Advisory 2024-30 addresses whether cannabis operators structured as S corporations, partnerships, or sole proprietorships can claim the IRC §199A qualified business income (QBI) deduction — the 20% pass-through deduction available to non-corporate taxpayers on quali…

The IRS Large Business & International (LB&I) division has formally launched a Cannabis Industry Coordinated Examination Program targeting multi-state cannabis operators (MSOs) with revenues above $10M annually. The initiative coordinates IRS agents across multiple examination te…

IRS Notice 2024-22 addresses a recurring question in cannabis tax planning: whether state cannabis license application fees, annual license renewal fees, and cannabis-specific state regulatory fees are "trade or business expenses" subject to §280E disallowance, or whether they ar…

Revenue Procedure 2024-15 provides long-awaited procedural guidance for IRC §471(c) — the small business taxpayer inventory method election that has become the primary §280E tax mitigation strategy for eligible cannabis operators. The revenue procedure clarifies: (1) the electi…

Revenue Ruling 2024-12 addresses the longstanding dispute over which costs cannabis retailers and dispensaries may allocate to cost of goods sold (COGS) as a method of reducing their otherwise disallowed deductions under IRC §280E. The ruling clarifies that selling, general, and…