After a lengthy legal fight with the Internal Revenue Service over the applicability of 280E business deductions to state-legal marijuana companies, Harborside on Monday got its final tax bill from the case: $11 million in back taxes from 2007 to 2012.
The case dates to 2016, when Harborside, based in Oakland, California, took the IRS to U.S. Tax Court in an attempt to invalidate 280E – a portion of the federal tax code that prevents MJ companies from taking standard business tax breaks – for all state-licensed cannabis firms.
However, Harborside lost in December when the Tax Court ruled in favor of the IRS.
Harborside’s executives referred to the decision as a “good outcome,” one it knew was coming.According to a news release from Harborside, the updated bill is actually good news for the company: If the U.S. Tax Court had ruled that IRS penalties had applied, the tab could have been $36 million.
Published: October 21, 2019
Founder & Interim Editor of L.A. Cannabis News