Boston Harbor was the site of a recent protest involving employees and supporters of a multistate company involved in the cannabis industry. The ‘Boston Pot Party‘ protest played off the historical Boston Tea Party of 1773. Unfortunately, the modern iteration of our forefathers’ Tea Party missed the mark entirely.
Protesters were voicing their objections to Internal Revenue Service (IRS) code 280E. The code prohibits cannabis companies from taking advantage of many of the standard tax deductions other businesses utilize to reduce their taxable income. The protest’s sponsor, MariMed, says the code is unfair and should be repealed.
MariMed might be right. But the company might also be wrong. Either way, comparing their objections to 280E with the objections of the 1773 protesters is both inappropriate and historically sketchy.
Taxation Without Representation
Every school child who learns about the Boston Tea Party knows the phrase “taxation without representation.” That was the root of the 1773 protest. Britain thought nothing of indiscriminately raising taxes on American colonists. Yet at the same time, the colonists didn’t enjoy any representation in the British government. They had no say in Parliament because they had no representatives.
Their contention was that taxing them without allowing them to participate in government was morally wrong. They were absolutely right in that position. Government is supposed to work for the people, not the other way around. Taxing people without allowing them active participation goes against that ideal.
Marijuana Companies Are Represented
A significant difference between the 2023 and 1773 protests is representation. Whether cannabis companies like the tax code or not, they cannot claim a lack of representation in either Washington or the states. Every cannabis company owner can vote. Likewise for their employees, vendors, and customers.
What protesters seem to be missing here is that the IRS really has no other choice. Sure, the IRS might be a shady government entity that takes advantage of taxpayers. But that doesn’t change the fact that federal law bans the general cultivation, distribution, and possession of marijuana and THC. The IRS could not eliminate 280E even if it wanted to. It cannot allow tax deductions on operations stemming from federally illegal businesses.
Medical Cannabis Isn’t an Exception
There are those who believe that medical cannabis should be an exception to the federal rule. It’s not. Police officers are the perfect example. They carry firearms, which are subject to federal jurisdiction. Federal law prohibits users of illicit drugs from owning or possessing guns. By default, this means police officers cannot use medical cannabis.
Similarly, interstate truck drivers are also subject to federal regulation. They are not allowed to use medical cannabis either. That may change in the near future with new drug testing rules, but any such rules won’t suddenly legalize cannabis consumption among interstate truck drivers.
Full Legalization Is the Only Way Out
Although the recent Boston Harbor protest missed the mark entirely, there is a lesson to be learned here: we have created this mess by allowing states to thumb their noses at Washington as they decriminalize medical cannabis and recreational marijuana.
Even conservative states, like Utah, have gotten on board. Utahmarijuana.org says only medical cannabis is allowed in the beehive state, but Utah’s neighbors have by and large adopted recreational marijuana on top of medical cannabis.
The only way out now is full legalization. Too many states have crossed the line to go back. But as long as state law conflicts with federal law, there will be no way to resolve issues like tax deductions and how they are applied to businesses.