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Deductions for Business Expenses Incurred Within the Cannabis Industry Section 280E of the Internal Revenue Code denies businesses the ability to deduct many normal business expenses if the businesses are trafficking in controlled substances. Without the ability to deduct their payments of rent, wages, advertising, and almost everything else other than the cost of goods sold, state-sanctioned cannabis businesses have faced federal income tax rates as high as 70 percent.[68] Given these high rates, some federal policymakers have proposed exempting state-sanctioned cannabis businesses from 280E with bills like the Small Business Tax Equity Act of 2017. State approaches to business tax deductions for the cannabis industry are varied, with some adhering to the federal governments strict limitations on such deductions and others allowing a broader set of business deductions more in line with what businesses in other industries are afforded.[69] In general, the cannabis industry would like to be able to claim the same types of ordinary business deductions available to other types of businesses

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