During the Benzinga Cannabis Capital Conference in Miami, David Van Vlierbergen, the CFO and co-founder of Fernway, and Anthony Coniglio, the founder, president, and CIO of NewLake Capital Partners Inc (NLCP), spoke about the burdensome tax liability faced by cannabis operators under trafficking laws.
Van Vlierbergen emphasized that this punitive tax liability affects every operator and hampers their operations. He and Fernway CEO Kit Gallant will also be speaking at the upcoming Benzinga Cannabis Capital Conference in Chicago on September 27-28.
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The Struggle for Fair Taxation: Cannabis & the IRS
Coniglio took the conversation on a historical detour, highlighting the origin of the issue. He mentioned that Congress enacted rule 280E, which requires even illegal businesses to report their income taxes and limits their deductions, resulting in high effective tax rates.
Section 280E of the Internal Revenue Code poses a significant obstacle for cannabis entrepreneurs, as it prevents them from deducting most of their business expenses. This federal law constrains the growth and innovation of cannabis businesses operating legally under state laws.
Benzinga editor Maureen Meehan compared this situation to taxation without representation, which Coniglio agreed with. The session by Van Vlierbergen and Coniglio shed light on the challenges faced by the budding cannabis industry and the need for fair taxation policies.
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With the success of the Miami conference, the Benzinga Cannabis Capital Conference is now preparing to return to Chicago on September 27 and 28. Visit bzcannabis.com to explore more knowledge about this industry.
Image by El Planteo