Executives reintroduce Boston Tea Party to protest cannabis tax rule

Executives at a Massachusetts-based cannabis company dressed in colonial robes board a ship in Boston Harbor on Wednesday to protest an IRS rule that requires regulated marijuana companies to pay taxes significantly higher than companies in other industries. The demonstration, which commemorated the legendary Boston Tea Party 250 years ago at the same location, was staged by licensed cannabis company MariMed to protest 280E, an IRS tax rule that is a bane on federally legal cannabis companies from coast to coast.

Lucas McCann, Chief Science Officer and co-founder of cannabis compliance consultancy CannDelta, explained how the IRS rule prohibiting most standard business tax deductions is affecting companies in the regulated cannabis industry.

“Section 280E of the Internal Revenue Code is a formidable hurdle for cannabis businesses, including retail pharmacies. In short, 280E is a code used to make cannabis companies less profitable by paying a larger portion of their total profits in taxes,” McCann, who was not involved in Wednesday’s protests, wrote in an email. “This outdated tax code dates back to the 1980s and was designed to prevent drug dealers from deducting business expenses for tax purposes. By a modern coincidence, today’s cannabis companies, while operating legally under state law, are still treated as illegal businesses federally as cannabis is still listed as a Schedule I substance.”

Protest reminiscent of the Boston Tea Party

Wednesday’s protest was a re-enactment of the famous Boston Tea Party of 1773, when colonists protested the heavy taxes the British Crown levied on tea shipped to the New England colonies. In an act of pro-independence resistance, members of the Sons of Liberty group, some disguised as Native Americans, boarded ships in Boston Harbor and threw crates of tea into the water to protest high taxes.

MariMed’s demonstration revived themes of the protest 250 years ago, this time with company executives in period clothing aboard the Liberty Star, a schooner adorned with banners protesting 280 E. The costumed protesters waved boxes labeled “weed” and shouted slogans as they boarded the ship and threw the boxes into Boston Harbor. In a statement, the company noted that the boxes were empty, made of natural wood and promptly recovered from the water.

“As a Boston-based multi-state cannabis operator, MariMed protested in a way that would make the company’s Patriot ancestors proud – by honoring the most famous tax protest in history in the year of the 250th anniversary of the Boston Tea Party,” the company said wrote. “By highlighting the negative financial impact of Section 280E on legal cannabis operators, MariMed hopes to bring about policy change geared towards the growth and advancement of the industry.”

MariMed CEO Jon Levine said the demonstration is a way to draw attention to tax regulations that are negatively impacting patients and consumers and threatening to cripple businesses in the regulated cannabis industry. He also called for an end to 280E for companies operating in compliance with state law.

“Section 280E is unfair and impedes companies seeking to make cannabis available to consumers and medical cannabis patients in all legal states,” Levine said in a MariMed statement. “It should be rescinded. This would remove an obstacle to our mission to improve people’s lives through cannabis every day.”

But getting rid of the tax rule is easier said than done. Legislative repeal of the rule is needed, but so far no specific mention of 280E has been made in federal cannabis policy reform bills. Widespread legalization of cannabis would render the regulation obsolete, but this solution is unlikely to be resolved any time soon.

“Several bills have been passed in DC, but to our knowledge none contain wording to repeal 280E,” Levine said in a statement to the High Times. “The most likely route to phasing out 280E is for cannabis to be rescheduled or de-scheduled altogether. President Biden has reached out to the Department of Health and Human Services for comment on this, but nothing has happened yet. Just another example of the drudgery in DC related to state cannabis reform.”