DOJ official reiterates stance against marijuana firms in 280E fight

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A Biden administration official has weighed in against marijuana companies a second time to the U.S. Supreme Court in cases involving Section 280E of the tax code.

A brief filed Monday by acting Solicitor General Elizabeth Prelogar argues again that lower courts have been correct in ruling that state-legal marijuana businesses can be investigated by the Internal Revenue Service for potential violations of 280E.

The court of appeals “merely explained, correctly, that the federal prohibition on trafficking marijuana is itself a sufficient basis for the IRS to investigate potential violations of Section 280E by petitioners, irrespective of state law,” wrote Prelogar, the fourth-highest-ranking official in the U.S. Department of Justice.

This particular appeal to the U.S. Supreme Court was filed by a group of cannabis companies led by Eric Speidell of Colorado-based The Green Solution.

It follows a similar petition filed at the U.S. Supreme Court by Denver-based Standing Akimbo to prevent the IRS from obtaining business records from state regulators.

Section 280E of the IRS tax code prohibits marijuana businesses from taking traditional business deductions because the plant is listed as a Schedule 1 drug under the federal Controlled Substances Act.

James Thorburn, an attorney representing both The Green Solution group and Standing Akimbo, said previously that he was disappointed that the Biden administration’s approach to marijuana hadn’t softened.

Prelogar’s filing noted that multiple Colorado marijuana dispensaries have challenged in lower courts the IRS’ ability to investigate their taxes and have lost every time.