- Both Code sections end with a capital letter.
- Both are in Subchapter B.
- Both have to do with deductions.
- Both treat certain types of businesses differently than others for no good reason.
- Both feature separate/multiple trades or businesses tests.
It’s the last bullet that makes me wonder if or how §199A might influence the application of §280E in the future (assuming § 280E isn’t repealed and/or marijuana descheduled in the near term).
A Very (Very) Brief Obligatory Overview of §199A
The Tax Cuts and Jobs Act of 2017 reduced the corporate income tax rate from a maximum graduated rate of 35% to a flat 21%. In order to create some parity between the lower corporate rate and the rates applicable to pass-through forms of business, §199A was added. Section 199A provides an income tax benefit to investors in pass-through businesses (e.g., partnerships and S corporations). Non-corporate investors may (after navigating a minefield of thresholds and exclusions and re-inclusions and exceptions to exceptions) be eligible to claim a deduction of up to 20% of the “qualified business income” earned by such pass-through businesses (the “QBI Deduction”).
Separate Trade or Business Considerations
There are several interesting cases that … Keep reading
Discoveries advance on a regular basis as to how cannabidiol and related therapeutics can heal or at least relieve the pain associated with health conditions. From cancer and opioid addiction to chronic pain and glaucoma, medicinal cannabis shows great promise. As with other efforts to address a patient’s condition, this field will morph toward a more personalized set of therapy regimes. The broader precision medicine field has a significant head start, though, because of the years of both longitudinal and historical data studies. The medicinal cannabis field must leap ahead in this direction.
The proliferation of different, proprietary data sets is seen slowing the growth and penetration of more ‘traditional’ personalized medicine. Each pharmaceutical company, bio bank and research organization has already collected large amounts of data from clinical trials, patients, providers and other sources. But the data an organization owns might not contain the insights it needs to achieve a breakthrough in personalized medicine.
As medicinal cannabis providers collect and combine data sets, the key will be ensuring that those sets are correctly linked and that the data itself provides enough depth to yield real insights. That points to the need to set consistent standards for collecting data … Keep reading
One of the biggest challenges facing the legal cannabis industry today (as we’ve covered extensively on this blog) is access to, or better yet lack of access to, banking services. Because the use and sale of marijuana remains illegal at the federal level, banks and credit unions have been hesitant to provide services to cannabis-related businesses, even in states that have legalized both medical and recreational cannabis. The concern from a banking perspective is that providing banking services to these companies could potentially lead to allegations of money laundering and aiding and abetting federally-illegal operations. While this has not completely prevented cannabis companies from operating in states where it is legal, it has forced a burgeoning industry to operate on a virtually all-cash basis, leading to many financial and safety concerns.
As a potential solution, in May 2017 Senator Jeff Merkely (D-OR) and Ed Perlmutter (D-CO) introduced the “Secure and Fair Enforcement (SAFE) Banking Act”, which proposed certain protections for banks against criminal and civil liabilities for serving legitimate cannabis companies that operate in compliance with applicable state law. The Safe Banking Act was not only intended to legitimize an up-and-coming industry, but also aimed to establish banking … Keep reading
Last week the firm moderated a discussion of banking and lending in the cannabis industry. The event was well attended and most importantly provided practical insights concerning the financing of cannabis businesses (medicinal and recreational) and detailed review of just how regulated and scrutinized operations are when it comes to business financing or daily financial transactions. The bottom line appeared to be that in order to obtain financing or to evolve from a cash business, an organization needs to be squeaky clean.
One question that arises regularly is whether medicinal cannabis firms are subject to HIPAA, the federal Health Insurance Portability and Accountability Act of 1996, which is the primary set of laws and regulations applicable to the privacy and security of patient information. It makes sense intuitively that if a dispensary fulfills a prescription or request for a CBD product then the information associated with the patient, the order, and payment should all be considered “protected health information” or “PHI” under HIPAA.
Does HIPAA Apply to Medicinal Cannabis?
Typically, a medicinal cannabis dispensary or related business would not be subject to HIPAA. However, circling back to the discussion of banking and lending, any organization in the … Keep reading