Recently, I mentioned that except for Champ v. Commissioner. no cannabis company has ever won an IRC §280E case. One of the more famous setbacks was a 2018 case known as Harborside v. Commissioner, which expressly found Internal Revenue Code §280E constitutional. That decision started with the memorable line that:
“[Harborside] owns what may well be the largest marijuana dispensary in America. To the Commissioner that makes it a giant drug trafficker, unentitled to the usual deductions that legitimate businesses can claim…”.
You can probably guess where it went from there– Harborside was routed. Today, however, they are at it again, re-litigating that case in the U.S. Court of Appeals for the Ninth Circuit.
Before I get going on Harborside’s case, I should disclose that my law firm represents the company on matters unrelated to the present litigation. I am writing this blog post with a green light from Harborside (but without its input or review). I should also disclose that I’m not a tax controversy lawyer and no one in our cannabis business practice group has that specialized experience. However, we do understand tax issues well and we have structured hundreds of cannabis businesses over the