Oregon’s long-serving cannabis champion in Congress, Rep. Earl Blumenauer, this week again introduced the Small Business Tax Equity Act to exempt state-legal cannabis companies from the onerous 280E section of the federal tax code, which essentially prevents marijuana businesses from claiming standard business tax deductions and costs the industry untold millions per year.
In a press conference Wednesday, Blumenauer called 280E a “major area of discrimination” against the cannabis industry, and said recognition of the policy’s basic unfairness toward law-abiding marijuana companies is beginning to spread in the House and Senate.
“This has been a process of building support, building understanding, and mobilizing more and more allies in Congress,” Blumenauer said when pressed on how he expects any Democratic bill to make progress in the GOP-controlled House.
The bill is also bipartisan, with Republican Reps. David Joyce, Nancy Mace, and Brian Mast signed on as co-sponsors.
And Blumenauer said he’s making the argument to colleagues that if 280E is repealed, it could actually result in a net increase of taxes paid to the federal government, since he said he knows a good number of cannabis companies do their best to avoid paying their full federal tax bills since 280E typically wipes out most, if not all, profits.
“I’m absolutely convinced when we are able to fully deduct their business expenses that there actually will be more revenue collected, because people will comply fully with the law,” Blumenauer said.
But, he added, his office didn’t have a fiscal analysis to share yet showing how much his bill might cost the Internal Revenue Service or save cannabis companies, so the full financial impact of repealing 280E is still unclear.
Will SAFE Finally Pass?
The congressman also sounded off on the status of the SAFE Banking Act, the marijuana rescheduling process underway at the Department of Health and Human Services, potential for interstate cannabis commerce, and prospects for marijuana legalization.
Blumenauer said he’s “more optimistic than I’ve ever been,” but he also cautioned that it’s “dangerous” to let “good legislation … be held hostage,” in the context of some Democrats demanding that social equity provisions be a top priority with any cannabis reform measure.
“Standing back and laying down absolutes, that people aren’t going to participate unless it’s all or nothing, I think is defeat(ist),” Blumenauer said. “We had that situation, when we were dealing with the SAFE Banking Act, there were some people who didn’t want to make any changes until they got everything they wanted, in terms of their social justice provisions. And in the meantime, the people who paid the price for the inability for state-legal cannabis enterprises to have bank accounts have been those marginalized people.
“I don’t want to be in a situation where we’re not going to move forward with progress that would make a huge difference, getting us to the ultimate reform faster, unless it’s all or nothing. We’ve had that that conversation,” he said.
That aside, Blumenauer projected confidence that SAFE Banking will get through to President Joe Biden’s desk this coming congressional session.
“We came within an eyelash of being able to accomplish it last session. I think there’s obstacles that have been cleared away. I think there’s a commitment to move it forward. And I’m pleased that it is a top priority in this Congress,” he said, noting that a whopping 321 members of Congress backed SAFE in the last two sessions.
“There’s no indication that the level of support is diminished. I think it is strengthened,” Blumenauer said, adding that he expects “the breakthrough is probably going to start in the Senate.”
Path to Rescheduling
The congressman also pledged to keep a close eye on the Department of Health and Human Services as it works on its recommendations for the Biden administration regarding possibly moving marijuana either lower on the list of federally controlled substances or off the list altogether.
The process could result in federal cannabis legalization, or it could maintain the status quo.
“We’re working hard to make sure that the federal agencies working on this are fully transparent. The more we see, the more they do, the more likely we’re going to get that taken care of,” Blumenauer said.
“The administration signaled their openness to descheduling.”