Taking a Stand: Executives Channel the Spirit of the Boston Tea Party to Oppose Cannabis Tax Rule

Taking a Stand: Executives Channel the Spirit of the Boston Tea Party to Oppose Cannabis Tax Rule

Taking a Stand: Executives Channel the Spirit of the Boston Tea Party to Oppose Cannabis Tax Rule

The Spirit of the Boston Tea Party

The Boston Tea Party, a historical event that took place in 1773, was a political protest against the Tea Act imposed by the British government. The act was seen as an unfair taxation without representation, leading to a rebellion where American colonists dumped 342 chests of tea into the Boston Harbor. This act of defiance is often seen as a precursor to the American Revolution and is a symbol of resistance against unjust taxation.

Fast forward to the present day, a similar spirit of resistance is being channeled by executives in the cannabis industry. They are taking a stand against what they perceive as an unfair tax rule that is stifling their industry.

The Cannabis Tax Rule

Section 280E of the Internal Revenue Code, enacted in 1982, prohibits businesses from deducting otherwise ordinary business expenses from gross income associated with the “trafficking” of Schedule I or II substances, as defined by the Controlled Substances Act. Despite the legalization of cannabis in many states, it remains a Schedule I substance at the federal level, making this tax rule applicable to cannabis businesses.

This rule has resulted in effective tax rates of up to 70% for cannabis businesses, significantly higher than the average corporate tax rate of 21%. This has led to a significant financial burden on these businesses, hampering their growth and profitability.

Opposition to the Rule

Many executives in the cannabis industry argue that this tax rule is unjust and hampers the growth of a legitimate industry. They point out that this rule is a relic from the war on drugs era and should not apply to a legal and regulated industry.

For instance, Steve DeAngelo, co-founder of Harborside, one of the largest cannabis dispensaries in California, has been a vocal critic of Section 280E. His company has been engaged in a long-standing legal battle with the IRS over this issue. Similarly, other cannabis businesses have also filed lawsuits challenging this rule.

Implications and the Way Forward

The opposition to the cannabis tax rule is not just about reducing the tax burden on cannabis businesses. It is also about the broader implications for the industry and society. High tax rates can make legal cannabis products more expensive, potentially driving consumers towards the illicit market. This undermines the purpose of cannabis legalization, which is to eliminate the illicit market and ensure consumer safety.

Moreover, the high tax burden can deter investment in the industry, limiting its growth potential. This can have broader economic implications, given the job creation and tax revenue potential of the cannabis industry.

Therefore, there is a growing call for reforming the cannabis tax rule. Some propose exempting cannabis businesses from Section 280E as long as they comply with state laws. Others suggest de-scheduling cannabis from the Controlled Substances Act, which would effectively make Section 280E inapplicable to cannabis businesses.


In conclusion, the opposition to the cannabis tax rule is a modern-day manifestation of the spirit of the Boston Tea Party. Just as the American colonists stood up against unjust taxation, cannabis executives are taking a stand against a tax rule they perceive as unfair. The outcome of this battle could have significant implications for the cannabis industry and beyond.

By C.N.W

Keywords: Boston Tea Party, Cannabis Tax Rule, Section 280E, Cannabis Industry, Taxation, Controlled Substances Act


  • https://www.history.com/topics/american-revolution/boston-tea-party
  • https://www.irs.gov/pub/irs-drop/rr-81-88.pdf
  • https://www.forbes.com/sites/irswatch/2020/01/13/cannabis-industry-counts-the-cost-of-280e/?sh=6b9f8b3b6f80
  • https://www.latimes.com/business/la-fi-harborside-tax-court-ruling-20181129-story.html
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