For those who might have skipped a few classes in high school, a quick recap here: in 1773, a group of colonists dumped 342 chests of tea into the Boston Harbor in what would become one of the most famous tax protests in American history.
This week—some 250 years later—senior leaders at multistate cannabis company MariMed re-enacted that revolt, boarding the 67-foot Liberty Star schooner in period-perfect costumes and reading grievances off an antique-style scroll.
But the modern uprising—a Boston THC party, if you will—did not throw ganja into the Massachusetts Bay, opting instead for sustainable wooden boxes with the word “weed” stamped on them. (They were quickly fished out of the water).
While the stunt leaned into showmanship and sleight of hand, it had a serious purpose, much like its 18th century predecessor.
MariMed is calling attention to Section 280E of the Internal Revenue Service code—dubbed a contemporary version of taxation without representation—which prohibits cannabis companies from deducting ordinary business expenses.
Cannabis is classified as a Schedule 1 controlled substance, on par with heroin, and the IRS technically considers its purveyors drug traffickers who aren’t allowed to write off basic business costs such as marketing, salaries, rent, legal fees and insurance.
The result of 280E is higher taxation than any other business category, “which hurts profitability and means higher prices for consumers,” Howard Schacter, chief communications officer at MariMed, told Adweek before boarding the tall ship.
“We’re paying homage to our patriot ancestors, protesting a tax that singularly burdens the cannabis industry,” Schacter said. “We’re saying enough is enough.”
Sky-high taxes
According to research by Whitney Economics, the cannabis industry paid an estimated $1.8 billion more in federal taxes than non-weed companies in 2022. The number is expected to climb to $2.1 billion this year, per MJBizDaily.
280E is not only unfair, it’s untenable, causing some dispensaries to close their doors and brands to shutter because they can’t turn a profit, according to industry leaders. The rule makes it more difficult for legal operators to compete with the illicit market, which pays no taxes and offers cheaper products as a result.
