SB 471, the "No Deductions for Marijuana Businesses Act," would amend Section 280E of the Internal Revenue Code to preserve and restate the federal prohibition on tax deductions and credits for businesses engaged in trafficking marijuana or other controlled substances. The bill rewrites the provision to specify that no deduction or credit is allowed for amounts paid or incurred in carrying on a trade or business that consists of trafficking in marijuana, as defined under the Controlled Substances Act, or in Schedule I or II controlled substances, where the conduct is prohibited by federal law or by the law of the state where the business operates.
The measure is a federal tax policy change rather than a criminal law change. Its practical effect would be to continue denying ordinary business tax benefits to marijuana-related businesses, including those operating in states that have legalized cannabis under state law, so long as the activity remains prohibited under federal law. The amendment would apply prospectively to amounts paid or incurred after enactment in taxable years ending after that date.
Impact
The bill would amend Internal Revenue Code Section 280E, which governs deductions and credits for businesses trafficking illegal drugs, by explicitly including marijuana in the statutory text. It would reinforce the existing federal tax treatment that disallows deductions and credits for cannabis businesses, affecting marijuana dispensaries, cultivators, and other cannabis-related enterprises that are subject to federal tax filing requirements. Because the bill ties the rule to conduct prohibited by federal law or state law, it would continue to limit tax relief for businesses operating in the cannabis industry even in jurisdictions where marijuana is legal under state law.
Sentiment
The available legislative record shows a neutral-to-supportive posture from the bill’s sponsors, with no recorded committee debate or votes in the provided materials. The bill was introduced by Senator Lankford, with Senator Ricketts as a cosponsor, and was referred to the Senate Committee on Finance. The absence of transcripts or vote data means there is no documented opposition or support beyond the bill’s introduction and referral.
Contention
The main point of contention is likely the treatment of state-legal cannabis businesses under federal tax law. Supporters of the bill appear to favor maintaining a strict federal tax penalty for marijuana trafficking, while critics would likely argue that the measure continues to burden regulated cannabis businesses that comply with state law but remain subject to federal prohibition. Another potential issue is the bill’s broader application to controlled substances and whether the language could affect businesses in states with differing drug laws, but no specific objections are recorded in the provided materials.
Medical marijuana; directing licensed medical marijuana businesses to remove or lawfully dispose or surface trash, debris, waste, and substances; rules. Effective date. Emergency.