{"id":75,"date":"2021-02-09T19:15:21","date_gmt":"2021-02-09T19:15:21","guid":{"rendered":"https:\/\/cannabistaxattorney.us\/?page_id=75"},"modified":"2021-10-12T19:05:38","modified_gmt":"2021-10-12T19:05:38","slug":"280e-floor-space","status":"publish","type":"page","link":"https:\/\/cannabistaxattorney.us\/280e-floor-space\/","title":{"rendered":"280E Floor Space"},"content":{"rendered":"\n

A Marijuana Dispensary\u2019s \u2018Separate\u2019 Business With Deductible Expenses Should Have Its Own Floor Space<\/h1>\n\n\n\n
\"Jin<\/figure>
Jin Kim<\/strong><\/i>
Law Office of Jin Kim<\/a><\/strong><\/br>Free Consultation<\/strong>
(916) 299-9913<\/a><\/strong><\/div>\n\n\n\n

Many businesses enjoy the ability to deduct ordinary and necessary expenses incurred in carrying on their trade or business.\u00a0 (IRC 162(a)<\/a>)\u00a0 Unfortunately, marijuana dispensaries don\u2019t belong to that group of fortunate businesses.\u00a0 Section 280E<\/a> of the Internal Revenue Code provides that no deduction shall be allowed for any amount paid or incurred in carrying on any trade or business if such trade or business consists of trafficking in controlled substances prohibited by Federal law.\u00a0 As marijuana is classified as a controlled substance under the Controlled Substances Act, marijuana dispensaries have by and large been denied business expense deductions.<\/p>\n\n\n\n

The CHAMP Decision<\/h2>\n\n\n\n

The court in CHAMP<\/a> gave marijuana dispensaries some hope of deducting part of their expenses.  In that case, the court held that 280E did not preclude the marijuana dispensary from deducting expenses attributable to its caregiving business simply because that same dispensary was also involved in the trafficking of marijuana.  In short, 17 of the 24 employees in addition to the director were dedicated exclusively to the dispensary\u2019s extensive caregiving services, and only 7 employees were involved in the distribution of marijuana.  Accordingly, 18\/25ths of the employee-related expenses could be allocated to its non-trafficking caregiving business and were thereby deductible.  In addition, marijuana was dispensed in only 10% of the main facility, while the remaining 90% was dedicated to caregiving services including the provision of daily lunches, hygiene supplies, counseling services, support groups, computer access, and social events.  In light of the extensive caregiving services, the court found the existence of a separate business with deductible expenses and a basis for allocating employee and facility expenses to that separate business.<\/p>\n\n\n\n

Floor Space Dedicated To The Separate Business<\/h2>\n\n\n\n

While the unique factors in CHAMP taken together led the court to find the existence of a separate business with deductible expenses were not barred by 280E, one factor that helped the CHAMP court make that determination and allocation was the percentage of floor space dedicated to the separate business vs. dispensing marijuana.  To highlight the importance of that allocation of floor space, in finding only a single business that trafficked in marijuana the court in Harborside noted that only 25% of the floor space was dedicated to nonmarijuana items which were only accessible by patrons who had presented credentials to security – meaning that only marijuana patrons could access nonmarijuana items.   <\/p>\n","protected":false},"excerpt":{"rendered":"

A Marijuana Dispensary\u2019s \u2018Separate\u2019 Business With Deductible Expenses Should Have Its Own Floor Space Jin KimLaw Office of Jin KimFree Consultation(916) 299-9913 Many businesses enjoy the ability to deduct ordinary and necessary expenses incurred in carrying on their trade or business.\u00a0 (IRC 162(a))\u00a0 Unfortunately, marijuana dispensaries don\u2019t belong to that group of fortunate businesses.\u00a0 Section […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":9,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"featured_image_src":null,"featured_image_src_square":null,"_links":{"self":[{"href":"https:\/\/cannabistaxattorney.us\/wp-json\/wp\/v2\/pages\/75"}],"collection":[{"href":"https:\/\/cannabistaxattorney.us\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/cannabistaxattorney.us\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/cannabistaxattorney.us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabistaxattorney.us\/wp-json\/wp\/v2\/comments?post=75"}],"version-history":[{"count":3,"href":"https:\/\/cannabistaxattorney.us\/wp-json\/wp\/v2\/pages\/75\/revisions"}],"predecessor-version":[{"id":323,"href":"https:\/\/cannabistaxattorney.us\/wp-json\/wp\/v2\/pages\/75\/revisions\/323"}],"up":[{"embeddable":true,"href":"https:\/\/cannabistaxattorney.us\/wp-json\/wp\/v2\/pages\/9"}],"wp:attachment":[{"href":"https:\/\/cannabistaxattorney.us\/wp-json\/wp\/v2\/media?parent=75"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}