Navigating IRC Section 280E: Current Updates For Cannabis Taxpayers

With October's deadline for taxpayers on tax return filing extension for tax year 2024 quickly approaching, this alert provides updates to our post in May on the exploding trend of cannabis tax filers taking the uncertain tax position that Internal Revenue Code Section 280E is inapplicable.

Update

Litigation Update

A closely watched case in Tax Court from New Mexico, New Mexico Top Organics, Inc. v. Commissioner, Tax Court Docket # 19661-24, is the first to raise the statutory construction arguments discussed below challenging Section 280E. There has been some recent procedural movement in the case as this summer, the Tax Court granted the parties' joint motion to submit the case on a stipulated basis under Tax Court Rule 122. This means the IRS and taxpayer have no disagreement on the facts, and the case boils down to only a legal dispute to be determined on the briefs. The taxpayer's opening brief is due October 17, 2025. The Internal Revenue Service's (IRS)